Measuring and Controlling Sustainability

Spanning Theory and Practice

Adam Lindgreen, Christine Vallaster, Dr. Shumaila Yousofzai, Bernhard Hirsch, Adam Lindgreen, Christine Vallaster, Dr. Shumaila Yousofzai, Bernhard Hirsch

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781315401881
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

Efforts to establish the measurement and control of sustainability have produced notable tools, but those instruments lack applicability in practice. Increasing the level of standardization of such tools also seems difficult to achieve, because the contexts surrounding the focal organizations differ considerably. Therefore, what we need is a systematic, interdisciplinary assessment of how to measure and control sustainability, so that we can establish an essential definition and up-to-date picture of the field.

Measuring and Controlling Sustainability attempts to provide such an assessment in 17 chapters, organized into four main topic sections: (a) organizations and social value creation: concepts, responsibilities, and barriers; (b) accounting, measurement, performance, and diffusion of social value; (c) practical and managerial insights from real-life cases; and (d) choices, incentives, guidance, and ethics.

This research anthology provides a comprehensive collection of cutting-edge theories and research that will further the development and advancement of measuring and controlling sustainable efforts in theory and managerial practice.

Part 1

Organizations and social value creation

Concepts, responsibilities, and barriers

1.1 The Responsible Care initiative as an enabler of implementing corporate social responsibility concepts in the chemical industry

Peter Letmathe and Ilja Rabinovitch

Introduction

Different approaches to corporate social responsibility (CSR) have been developed and implemented by numerous firms. Although a whole range of concepts exists, not all of them are seen as successfully promoting the environmental and social performance of organizations, as the broad strand of literature on greenwashing has illustrated (Bazillier & Vauday 2009; Gamper-Rabindran & Finger 2013; Laufer 2003).

There have already been studies covering the influences of voluntary reporting guidelines such as the Global Reporting Initiative (Nikolaeva & Bicho 2011), which found that firms not only tend to adopt CSR standards if the direct competitors apply them, but also when standards are implemented ubiquitously.

Prakash (2000) defines Responsible Care (RC) as a voluntary self-obligation that reaches beyond compliance with legal regulations. RC was officially launched by the Canadian Chemical Producers’ Association in 1985. In the years that followed, the programme was established in more than half of the world by the national chemical associations, for example in Germany by the German Chemical Industry Association in 1991 (ICCA 2015; VCI 2016). Hence, RC can nowadays be regarded as an established system to specifically foster safety in the use of chemicals, to prevent disasters, to protect health, and to promote more sustainable production practices (ICCA 2015). However, RC is also criticized for allowing greenwashing of firm practices (Howard et al. 1999).

Research question

The question as to how a well-defined and restricted initiative, such as RC, can promote the implementation of much wider concepts, such as CSR, is barely considered in the research literature. More specifically, it would be interesting to analyse whether RC can be seen as a capacity-builder for CSR implementation. Such capacities can potentially relate to timing (When did firms implement CSR concepts?), speed (How long did it take to implement CSR concepts?), implemented CSR methodologies (How do firms implement CSR concepts?), and CSR performance (Does RC lead to a higher environmental and/or social performance?).

The research questions that need to be answered are:

• How did the RC initiative develop, and how was it implemented by firms in the chemical industry?

• How has the development and implementation of RC influenced the adoption of CSR concepts in these firms?

In this chapter, we focus on environmental aspects of RC and CSR, and the CSR performance.

Theoretical framework

When analysing the interplay between RC and CSR concepts, we adopt three different frameworks. The first framework of weak and strong sustainability according to Rennings and Wiggering (1997) and Daly (1990) is applied to identify the degree to which firms contribute to a sustainable development. The second framework uses Dillard, Brown, and Marshall’s (2005) differentiation between a legal-driven, a market-driven, and an ethics-driven strategy of CSR. In this vein, King and Lenox (2000) argue that (in spite of their positive effects) self-regulative codes of conduct such as RC protect firms against strict legal regulation but do not lead to sanctions if the promises included in the code are not fulfilled. Third, the initiative will be valued according to Prakash’s (2000) club good assessment. Overall, we assume that firms who implemented RC early on and who have invested substantially in this concept tend more towards strong sustainability and an ethics-driven CSR approach. The underlying argument is that they not only understand market rationale and requirements better, but that the RC implementation was used as an existing platform for the introduction of CSR concepts. There are two reasons for this hypothesis. First, firms that have implemented RC earlier on develop a higher degree of awareness for the environmental and social impacts of their business practices. Second, having adopted RC early on increases knowledge about the identification and assessment of environmental and social aspects and lowers the cost of CSR adoption, as firms establishing RC have to develop infrastructure, competences, and reporting standards that can be used in implementing CSR approaches. An overview of the relevant theoretical frameworks is presented in Table 1.1.1.

For our analysis, we consider previous studies to investigate the motivations behind adopting RC. We analyse relationships between RC and CSR to understand the mechanisms of their parallel developments. Our research design looks at the antecedents of RC adoption, the degree of RC implementation, the motivation and timing of the introduction of CSR concepts, the underlying motivation (legal, market, ethical), and the CSR performance. This is a suitable, and usable, but not exclusive classification of CSR (Rahman 2011).

Table 1.1.1 Frameworks used for the analysis of the interplay between responsible care and corporate social responsibility concepts

Table 1.1.2 Extract of chemical industry disasters from the 1970s to the 1990s

The development of RC

Before RC was established in the 1980s, some severe chemical disasters happened that changed the public opinion about the chemical industry. An extract of these disasters is provided in Table 1.1.2.

RC was first developed between 1985 and 1988 by the members of the former Canadian Chemical Producers’ Association, now known as the Chemistry Industry Association of Canada. Since 1992, a voluntary publication of environmental data was enforced by member companies and an external auditing process was established in 1993. Furthermore, a new code of ethics and other principles as well as a relaunch of the common RC code were introduced (CIAC 2016; Druckrey 1998). Since 2000, these codes, codified in the Responsible Care Global Charter, have been updated and relaunched (CIAC 2016).

Motivation for RC and CSR adoption

According to Conzelmann (2012), the origin of the RC initiative is not only a response to the Bhopal disaster in 1984, but can be dated back to the Seveso disaster in 1976. In fact, public pressure that increased with each disaster forced the chemical industry to become more pro-active (Delmas & Toffel 2004; Givel 2007; Gössling & Vocht 2007; Reinhardt et al. 2008). In a qualitative, explorative study, Givel (2007) stated that one of the main motivations for establishing RC was to prevent harsh legal regulations. Due to the political discussion and press coverage at the time, such regulations were discussed in public. At the same time, the public reputation of many chemical companies was harmed, potentially resulting in lower financial performance. Therefore, the concept of RC can be regarded as a legal- and market-driven approach. As a front-runner in terms of setting standards, the chemical industry tried to re-create a more favourable reputation and to avoid negative legal and market consequences.

As for the interplay between RC and CSR, it is worth taking a look at the development of CSR in firms, especially between the 1980s and 2000s. Pinkston and Carrol (1996) investigated the motivation behind establishing CSR within the chemical industry. In a survey study, they asked decision-makers from the chemical industry in Western European countries, the United States, and Japan to assess their motivation for investing in CSR on a scale from 1 to 10. The motivation they used for introducing CSR was divided into four categories: market-, legal-, ethical-, and philanthropy-driven CSR. Their analysis showed that most firms implement CSR with the following order of priorities: market-, legal-, ethical-, and philanthropy-driven. By far, market- and legal-driven motivation were the most prominent. Pinkston and Carrol (1996) also found a lower importance of philanthropic-driven and a higher importance of ethical-driven CSR compared with previous and later studies (see also Aupperle 1982; Bansal & Roth 2006). These findings are consistent with those from Givel (2007), as firms try to avoid regulations that cause reductions to their income. As market-driven CSR refers to the motivation of increasing competitive advantage, legal-driven CSR can be considered as expenses that guarantee a continuation of the business, or in other terms, avoid competitive disadvantages.

In summary, the literature shows that pro-active engagement reduces the risk of harsher regulatory regimes. This is in line with Prakash’s (2000) interpretations of RC as a club that offers advantages to its members compared to non-members. The commitment of participating firms to meet environmental requirements lowers the risk of losing one’s reputation. However, if only one participant violates the rules of RC, resulting in an accident or disaster, the entire RC initiative is at stake. Hence, the established RC system might also be considered as a private regulation (Sethi & Schepers 2014; Sethi 2016). Similar motivations play a role for other non-governmental standards such as ISO 14001 (ISO 2004; King, Lenox, & Terlaak 2005; Prakash 1999; Prakash 2000; Potoski & Prakash 2005). In terms of CSR, we find that legal- and market-driven approaches were more important reasons to implement the respective CSR instruments and methodologies.

Interdependencies between RC and CSR

RC was established with an initial focus on preventing environmental accidents and the reduction of hazardous emissions in the chemical industry. Over time, several indicator categories measuring emissions, resource consumption, as well as health and safety aspects were introduced. Environmental indicators measure, among other aspects, nitrogen oxide, sulphur dioxide, and carbon dioxide emissions and their equivalents. The resource indicators monitor water, energy, and fossil fuel consumption. In the section on health and safety, aspects such as days lost due to accidents are documented (ICCA 2015). In particular, the safety of employees of member firms has been enforced since 1994 (Bélanger et al. 2013).

These aspects already cover domains commonly attributed to CSR. Moffet, Bregha, and Middelkoop (2004) state that RC is more of a firm’s or an industry’s philosophy and culture rather than an adopted code. Even though many firms adopt RC for market and legal reasons, internal reflection processes and learning about environmental aspects often lead to a more ethical-driven approach according to Dillard, Brown, and Marshall (2005). The more firms become aware of their environmental and social responsibilities, the more their management practices will develop towards a broader CSR implementation.

In general, RC includes a set of defined rules, and CSR is a much broader concept that can be and is complemented by more concrete guidelines such as the guidelines of the Global Reporting Initiative (GRI). Differences between RC and CSR are specifically relevant with regard to firm size. The implementation of CSR within smaller companies is often motivated by ethical re...