Introduction
The concepts of corporate social responsibility (CSR) and corporate environmental responsibility (CER) have become increasingly important in business administration over recent years. In view of a growing global concern about the environment, some businesses develop strategies to reduce their adverse impact on society and nature. According to Halkos and Nomikos, CER is “the environmental aspect of CSR, implemented to address issues regarding the environmental impacts of a company and reduction of waste disposal” (16).
Corporate environmental responsibility methods focus on not only eliminating the negative effects of the firm’s operations but also protecting the environment. At the same time, there are both proponents and opponents of CER, which suggests the need to evaluate the advantages and disadvantages of this approach for businesses. This paper provides a comprehensive perspective on the issue, presenting arguments that support the importance of corporate environmental responsibility for companies and discussing counterarguments and opposing views.
Overview of Corporate Environmental Responsibility
In general, corporate environmental responsibility refers to companies’ commitment to decrease or eliminate the adverse effects of their operations on the environment. Li et al. highlight the following five aspects of CER: “legal consciousness, social evaluation, eco‐friendly production, low‐carbon technology, and green management, … [which] strengthens CER understanding of firms, investors, and policy makers” (1045). Based on the available resources and knowledge, companies can identify and take measures to minimize their ecological footprint. Examples of companies that successfully incorporate environmentally responsible practices include large corporations such as Maersk and Unilever (Su et al. 1243). Their initiatives contribute to the so-called low-carbon economy aiming to reduce greenhouse gas (GHG) emissions. Overall, the importance of CER can be examined with regard to ethical considerations and economic benefits for businesses.
Arguments Supporting CER
Research findings indicate that there are several arguments supporting the crucial role of CER for companies, such as minimized environmental impact, improved brand image, economic benefits, and long-term sustainability of the business. In particular, the ecological effects of a firm’s operations can include pollution, gas emissions, waste production, deforestation, resource depletion, biodiversity losses, and other adverse consequences (Li et al. 1045). In turn, companies that support eco-friendly production and operations can help minimize the devastating influence on the environment and communities. As reported by Li et al., the use of renewable energy sources, low‐carbon technologies, waste management, and green production reduces the firm’s impact on nature and biodiversity (1045).
Halkos and Nomikos emphasize the role of supply chains in producing GHG emissions and contributing to deforestation, which implies the need for ecological supply chain management to minimize the adverse impact on the planet (117). Overall, corporate effort to implement eco-friendly practices is beneficial for reducing the negative environmental impact of business operations.
Another argument supporting CER is improved brand image, which results from the company’s dedication to ethical principles and environmental protection. The firm’s reputation depends on its adherence to socially responsible practices. Halkos and Nomikos report that corporate environmental responsibility helps create a competitive advantage for the firm by enhancing its brand image and public reputation (108). In the modern world, climate change and environmental issues become a growing concern for many people, and an increased number of customers are interested in supporting companies that are committed to sustainability and ethical practices. Therefore, CER initiatives can help build trustful and loyal relationships with clients and stakeholders (Halkos and Nomikos 108). Transparent communication and adherence to environmental protection improve the firm’s position in the market and strengthen its competitive advantage.
Another essential argument in favor of CER includes the economic benefits for companies that implement this approach. Research findings by Li et al. suggest that environmentally friendly practices help reduce costs as a result of optimized energy consumption and sustainable sourcing (1047). Halkos and Nomikos argue that “CER has a significant positive effect on firms’ performance, especially for those operating in highly polluting industries and where there is a low level of state ownership” (123). Furthermore, a company’s value can be increased due to efficient waste management, lower environmental costs, and other CER practices (Li et al. 1047).
These statements are supported by a study focusing on successful corporations that take necessary measures to lessen their environmental impact. In particular, based on data analysis of Unilever and Maersk, Su et al. report that “there is a positive correlation between the expansion of a low-carbon economy and the income of large companies” (1248). Moreover, an eco-friendly position is often associated with improved public perception of a firm, which, in turn, helps increase brand loyalty and sales.
Finally, CER can be used as a risk-management instrument, which contributes to the long-term sustainability of the business. Companies that acknowledge risks associated with the environment, such as climate change and scarcity of resources, can take proactive measures to protect not only the environment but also their future operations (Li et al. 1047). This statement applies to both small and large-scale businesses, as all companies can benefit from sustainability in the long run.
Counterarguments against CER
At the same time, there are several counterarguments against CER for businesses that need to be considered. According to Kasych et al., an eco-friendly approach “is accompanied by increased costs for reorganizing production processes, changes in technology, and updating the material and technical base” (9589). In other words, companies focusing on green production and sustainability may face significant financial burdens. Furthermore, there might be challenges associated with the measurement of the impact of environmental initiatives and efforts. As noted by Halkos and Nomiko, it is often problematic to evaluate the effects of corporate environmental responsibility practices on the environment and business performance (122). As a result, some firms may be discouraged from disrupting the usual approaches. Finally, another critical counterargument is based on the belief that corporations should focus on maximizing profits rather than protecting the environment (Halkos and Nomiko 122).
In this regard, company stakeholders and top management may prevent the implementation of green technologies and practices associated with significant expenses. Nevertheless, environmentally responsible companies can benefit from improved brand image, increased sales, reduced costs related to resource waste, and sustainability in the long term.
Conclusion
To conclude, the topic of corporate environmental responsibility is of particular importance in business administration. It focuses on firms’ measures to protect the planet and minimize their ecological footprint. There are certain challenges related to the implementation of sustainable and eco-friendly practices, such as additional costs, efficiency measurement issues, and the prevailing belief emphasizing the role of profitability over sustainability. However, the longstanding benefits of CER emphasize its positive impact on companies, communities, and the environment. Despite the critics’ concerns regarding the relevance of corporate environmental responsibility, research findings demonstrate that different aspects of a company’s operations can be optimized for improved performance with eco-friendly technologies.
Works Cited
Halkos, George, and Stylianos Nomikos. “Corporate Social Responsibility: Trends in Global Reporting Initiative Standards.” Economic Analysis and Policy, vol. 69, 2021, pp. 106-117. Science Direct. Web.
Kasych, Alla, et al. “Corporate Environmental Responsibility Through the Prism of Strategic Management.” Sustainability, vol. 12, no. 22, 2020, p. 9589. MDPI. Web.
Li, Zhenghui, et al. “Does Corporate Environmental Responsibility Engagement Affect Firm Value? The Mediating Role of Corporate Innovation.” Business Strategy and the Environment, vol. 29, no. 3, 2020, pp. 1045-1055. Wiley Online Library. Web.
Su, Zhixian, et al. “How a Low-Carbon Economy Affects Decision-Making and Profit Development in Large Corporations: Case Studies for Unilever and Maersk.” 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022), Xi’an, China, 22-24 July 2022. Atlantis Press, 2022. Edited by Balli, Faruk, et al., Atlantis Press, 2022, pp. 1243-1249. Database Name (if applicable), Internet address. Atlantis Press. Web.