An ethical perspective on Greenwashing by management - Helena Fechner (A01756186)

An ethical perspective on Greenwashing by management

Helena Fechner (A01756186)

The following paper deals with with the ethical problem of Greenwashing within businesses. First of all, the background and relevancy of the topic will be discussed. Secondly, the problem will be applied to ethical theory by creating a debate. Next on, my best ethical reasons will be evaluated. Lastly, a conclusion will be provided. 

Lately, there has been an increased interest in Corporate Social Responsibility (CSR) by companies as it is developing towards a more and more powerful demand by customers. The concept of CSR has thus developed to present an competitive advantage for companies. As the definiton of CSR is very broad, so are the options for companies to apply it (Porter & Kramer, 2006, p. 2; Van Marrewijk, 2003, p. 95). 

Consequently, companies feel the urge to follow the demand for CSR and thus, tend to publish their CSR practices although they are only very superficial (Bazillier & Vauday, p. 2). An example could be a company donating money to a charity and thus, marketing their positive contribution to the society. The same could account for a company planting 100 trees every year, which they are promoting as their positive impact of the environment. While it does not mean that these are negative actions, the line to Greenwashing is very fine. Greenwashing can be defined as the: “proliferation of services and products being marketed as “sustainable,” [which] exposes businesses to accusations of “greenwashing”” (Jacobs & Finney, 2019, p. 90).

The topic touches upon the topic of ethics on different levels, such as: consequences of the actions, the discussion about is costs and benefits as well as the topic of justice. 

Key words: Corporate Social Responsibility, Greenwashing, Society, Consequences, Costs-benefits, Justice, Virtues, Decision-making, Dignity

1. The point where Corporate Social Responsibility becomes Greenwashing is where companies efforts to be responsible become problematic. While in theory, conscious vs. unconscious Greenwashing show the true objective of the company, it is very difficult if not even impossible to differentiate these in practice. Such projects and activities are being promoted and shed a light over misbehaviours or lacking initiatives that the company has anyways (Alves, 2009, p. 7).

Thus, the ethical problem here seems to be highly related to the marketing of responsible practices (Raufflet et al., 2017: p. 121). Many times it is however difficult to understand companies’ claims as a customer, in other words, it is impossible for customers find out to what extent the named measures are actually conducted and what the real impact is (Bazillier & Vauday, p. 2).

While the company, the employees and the clients are all affected alike, the executives have a major obligation to avoid greenwashing. 

An executive could have the following thoughts about her or his options: conduct such CSR practices but do not promote them (thus, impact for society exists but competitive advantage is lost) or continue the marketing of these practices (risk Greenwashing due to the lack of being align with CSR throughout the whole business). This could cause the following way of thinking: to introduce a full CSR strategy the company might be missing resources, but to be transparent about it could make customers understand the sustainability gaps that exist. To risk the competitive advantage could mean to miss out on essential revenue. 

One would be targeting the economic welfare of the company and the other one the social one. So which one is more sustainable in the long-term? Can economic and sustainable interests even be combined effectively? And is honesty causing a loss of revenue?

This problem demonstrates the complexity and difficulty of companies introducing CSR initiatives. While some company might actually mean it and are making a really effort to do good, others are easily jumping on the train of promoting sustainable practices without actually executing them. However, the true objective of the company is hardly every recognizable. This is where it becomes difficult for an outsider to judge the difference between the companies and their true impact and creates an ethical dilemma in the industry. 

2. In the following, major ethical categories will be compared and analysed in regard to the previously explained business ethics problem. 

When looking at the situation described above, Kant’s viewpoint on the topic can be easily identified. For him there is only one human characteristic that is unconditionally good, the good will (Rachels, 2006, p. 191). Thus, it becomes clear that wanting to do good and therefore donating for a company, justifies for Corporate Social Responsibility. Considering the categorical imperative by Kant would also mean that promoting such initiatives as socially responsible practices can become an universal principle, as long as the good will exists (Rachels, 2006, p. 191; Cortina, 1996, p. 6-7).

When however taking into consideration the discourse ethics by Habermas and Apel, it suggests that standards are only valid if they find the consent of all concerned stakeholders in a practical discourse, it must be mentioned that this can hardly be applied to the presented problem. A decision of the execution and the marketing of CSR practices usually only lies in the hand of the executives. Affected people such as the customers, employees or suppliers do not get a say in this (Mingers & Walsham, 2010, p. 846; Woiceshyn, 211, p. 311). 

Aristoteles examined and described ethics from the perspective of the acting individual. Thus, he asks the question what does a person (or a company in this case) have to do to be good? To achieve this, he described this ideal behavior as consistent with virtues. And the highest virtue is first of all reason and wisdom, which can recognize this right behavior. And in order to recognize the other virtues, he looks for the optimal balance between two extremes. For a company to be virtuous about responsibility doesn't just mean to put all its money into sustainability measures and go bankrupt and endanger the jobs of all employees, but it does not mean either to simply do nothing and endanger the environment and the society. But virtue in this sense means to find the right balance through the application of reason and wisdom, which makes a company a good individual (Cortina, 2016, p. 9; Gomez Robledo, 2004, p. 30).

In contrast, the social contract by Hobbes contradicts with the topic of Greenwashing, as it would imply cheating on the social contract with the competitives in the industry (Velásquez, 2008, p. 31).

The Utilitarianism would however disagree with this approach of taking a look at the individual, but focusing on the importance of the well-being of all affected people. Thus, the risk of Greenwashing can have major implications on a variety of actors involved in the society. Although, some are being helped, it is only of superficial and mostly short-term effect. The consequences show that customers and the society itself is being fooled in the long-term and do not receive any larger benefit from the issue. When considering the dimension of utility – benefit, it must be acknowledged that the utility for the company in this case is creater for the society, which clearly defeats the purpose of this problem (Velásquez, 2008, p. 61; Rachels, 2006, p. 168). 

Especially when the consequences of the action are being considered, it becomes clear that the presented problem is not in align with the traditional utilitarianism as the consequences measured in the long-term are not particularly beneficial for any of the parties involved. The projects receiving the donations might become dependent on them and suffer if they are ending one day, the customers are being fooled into believing they are customers of a responsible customer and the company itself because they might be accaused of Greenwashing and receive a bad reputation. Due to a missing strategic approach, the company does not receive any returns from the actions, as they missed the opportunity to turn them into investments (Rangan, Chase & Karim, 2012, p. 4; Braga Junior et al., 2019, p. 229). 

3. Personally, the most relevant argumentation concerning this issue is being provided by the Utilitarianism. By providing a critical evaluation of the issue, it helps to identify a long-term perspective of the issue. Something, that is certainly necessary when discussing sustainability. It invites the decision-maker to think about consequences and the wider range of affected individuals (Rachels, 2006, p. 164, 168). This is also an important consideration, as businesses tend to not think further than concerns about their immediate business and industry, but especially when it comes to CSR companies must understand it, to extend this power and responsibility to the well-being of the whole society. Thus, it must become clear that transparency is the key to avoid Greenwashing to keep the dignity (Cortina, 1996, p. 7) Dignity, through an ethical perspective provided by Kant, can be understood as “an inviolable property of all human beings, which gives the possessor the right never to be treated simply as a means, but always at the same time as an end” (Schroeder, 2010, p. 2). In other words, in ethics it is important to keep the own value of an individual (or group) by respecting it unconditionally. If a company truly wants to bring change, they should start incorporating CSR-matters within the chore of their business strategy, basically create a social contract with themselves (Velásquez, 2008, p. 31). Thus, to combine the long-term view and the implementation at heart the Sustainable Development Goals by the United Nations provide a suitable guideline for companies. The objectives cover all dimensions of sustainability and provide specific targets and indicators that are supposed to facilitate the implementation, not only for governments put also for private sector institutions (Raufflet et al., 2017: p. 224-227). 

Additionally, it should become apparent that false claims in marketing can be considered as an ethical crime. However, I also believe that one of the best arguments when dealing with sustainability and business, is to find the middle between these two aspects just like Aristoteles suggested. One has to find the right balance that combines both in a way that they create value together. This means that a company should be driven by both aspects, without destroying the other. The question that arises for them therefore should consist of critizing and evaluating the own practices. What are the efforts that the company is making right now towards CSR? Fortunately, different tools exist nowadays for companies to execute such self-evaluation. Not only do these structures help to identify the own position within the process of reaching CSR, but they also provide the option of certification. Such certficate will certify the practices of the company, by referring to certain standards and thereby lowering the risks of Greenwashing. Examples include the ISO 26000, ETHOS or the Norma Mexicana de Responsabilidad Social (Raufflet et al., 2017: p.77-78). 

Thus, the solution to this ethical concern in business management is to not only avoid Greenwashing but to fight it actively. On the one hand, practices should only be promoted if they are actually being executed. Details ought to be provided to prove its existence. Further on, the executives should think about the practices which are actually worth mentioning. The open communication also relates to the importance of a dialogue between company and stakeholders that has been underlined by Raufflet et al. (2017, p. 89). Basic sustainability practices should be common sense anyways if aiming to succeed in the long-term. Thus, resources should be used to invest in a further development of sustainability within the business model. Only this will provide a competitive advantage in the long-run.

1    Conclusion

To conclude, it can be said that a theoretic perspective on the identified problem identified the relevance of the issue even more. It became clear that the consequences can me enormous and dangerous, even though they start with good intentions. This is mainly because of the wide range of individuals and groups affected by Greenwashing. Despite the fact that individuals, such as customers or even employees are being fooled, the society might eventually be disappointed when understanding the short-term focus of these project. The biggest impact is most likely to be felt by the industry who needs to cope with it. Due to a competitive pressure that is increasing by more and more companies promoting themselves as sustainable or socially responsible companies, the others feel the need to tag along. 

Although it is a positive aspect that more companies are getting interested in applying Corporate Social Responsibility within their practices, it is a rather unfortunate development that it is only being applied superficially. This way, it is difficult to differentiate companies that are actually being responsible with companies that are just pretending. Not only is it unethical to give credits to companies that are Greenwashing, but also is it unethical to use the well-being of potentially less priviliged societes as a mean to cover yourself as an ethical company. As the society becomes more conscious about responsible practices it is a topic that businesses of all kinds within all industries will need to deal with. 

Sooner or later, a company who is only Greenwashing will get caught and will not receive the long-term benefit from being truly sustainable. Once again, this draws the attention to the importance of transparency, which presents part of the solution at the same time. 

Referencias:

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