Corporate Environmental Social Responsibility: Corporate Greenwashing or a Corporate Culture Game Changer?

This article focuses on the extent to which unenforceable voluntary initiatives undertaken by corporations can change corporate behavior to make businesses more environmentally responsible, i.e. not only comply with the law, but to do more than the law actually requires of them. These initiatives, loosely gathered under the umbrella of a movement called corporate social responsibility (CSR), are often proposed by the government as a way to fill regulatory and enforcement gaps or by industry, often as an alternative to regulatory requirements. In each case, their goal is to improve the compliance record of businesses and, in some cases, to achieve a higher level of environmental performance. Based on a closer look at some of these initiatives and their design flaws, this article concludes that these voluntary programs, even when properly designed, should only function as supplements, not replacements, to existing regulatory programs and will only be effective if judicially enforceable by third parties. To develop this idea, the first part of the article very briefly discusses the regulatory problems, including the ineffectiveness of federal enforcement, that have, to some extent, spurred a turn towards corporate self-regulation and the emergence of the concept of CSR. The second part of the article looks more closely at corporate culture and asks what about it makes businesses seemingly indifferent to being seen as good environmental citizens. One thing that emerges from this discussion is that shame and compliance sanctions levied against the corporations are imperfect motivators when it comes to overcoming the institutional pressure on firms to make a profit for their shareholders. The third part of the article discusses the CSR movement more broadly, its origins and the likelihood that it is not disappearing any time soon; while the fourth part discusses some of the potential benefits of CSR programs to corporations and society as a whole, including their latent capacity to change corporate attitudes towards the environment. The fifth part of the article turns to three examples of voluntary CSR programs: information disclosure programs; voluntary performance standards; and environmental management systems (EMSs). Studies show that these programs have been largely ineffective, creating the perception that firms undertake them principally for public relations purposes and not to achieve any real change in corporate behavior let alone social benefit. This part examines three principle problems with these programs; specifically, the absence of any internal or external monitoring of their effectiveness, their lack of public transparency, and the absence of sanctions or other consequences for businesses or their employees who promise to undertake a CSR initiative and then fail to do so or only support the initiative in a half-hearted way. However, given the problems with regulatory programs set out in part I, properly designed and enforceable CSR programs that function as supplements to existing regulatory programs may be the best way to change corporate culture because they work within, not outside, the corporation. The sixth part of the article reviews possible design changes that might be made in these initiatives to overcome the flaws identified in part V; however, as this part shows, it is unlikely that businesses, without being ordered, will change their CSR programs because of the attendant costs. Accordingly, the final part of the article discusses the importance of litigation as a means to improve the design of CSR programs and compel their implementation. Two types of lawsuits are discussed: one, the typical citizen enforcement suit, which presumes the inclusion of the company\u27s CSR initiative into its regulatory permit when undertaken to gain the benefits of some Environmental Protection Agency (EPA) CSR program; the other, a suit brought in state court employing contract principles. Neither approach is without problems. Yet, both offer the opportunity for real reform. Indeed the mere threat of such lawsuits can induce companies to change their behavior to avoid the costs of defending against them and the unwanted publicity; once filed, there is a possibility of settlement, where structural changes can be made to the business\u27 operation to include a more robust CSR program