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The question is whether the companies, besides regulations and decrees of different kinds, have an additional responsibility to take resources that are earmarked to generate profits and transfer these to environmental work, for example. What should our attitude be to companies voluntarily renouncing from profits in favour of other social interests?
SUSTAINABLE DEVELOPMENT was launched as a term in the Brundtland report in 1987. Since then, it has been subject to a lively debate, in particular as concerns the climate. Part of this discussion has been devoted to what companies can do – and actually do – on a voluntary basis in order to contribute to a sustainable development that contains economic, environmental and social development. What is common for these companies is that, in some way, they take social responsibility, they act using Corporate Social Responsibility (CSR). The question is whether the companies, besides regulations and decrees of different kinds, have an additional responsibility to take resources that are earmarked to generate profits and transfer these to environmental work, for example. What should our attitude be to companies voluntarily renouncing from profits in favour of other social interests? CSR can be divided into altruistic CSR and strategic CSR. Altruistic CSR means that the company “sacrifices” profits in the service of society while strategic CSR means that the company does, in principle, profit maximise in the traditional sense, but with the focus on an extended social responsibility. RESPONSIBLE consumers and their preferences for products with CSR-attributes constitute an explanation for observed CSR. These can potentially create incentives for strategic CSR since they are willing to take on all or part of the costs for the voluntary social responsibility of companies.
COMPANIES AND INDIVIDUALS change their behaviour due to changes in prices and higher incomes. It is reasonable to assume that there has also been a change in preferences, for example, the richer we get, the less we care about the environment. Observed CSR can then be seen as a conventional economic adjustment to new market conditions. CSR is largely well-integrated with a strategy which characterises the business model of most companies: profit maximisation in the traditional sense.
AUTHOR Tommy Lundgren is Professor of Economics at Centre for Environmental and Resource Economics (CERE) at Umeå University . E-mail: tommy.lundgren@usbe.umu.se.