How do corporations cope with the opposing pressures of profit and social responsibility?
We’re all familiar with the pressure that corporations face to make a profit – they are legally bound to provide a return for their shareholders. But nowadays, businesses face other pressures from grassroots organisations and society as a whole: They must be socially and environmentally responsible. How do they cope with these two arguably opposing forces?
We’ve seen an onslaught of “socially responsible” corporations that show they care through philanthropic investments, or increasing the sustainability of their offices by using recycling bins and compact fluorescent light bulbs. They win awards for their supposedly socially and environmentally friendly work, and create policies that sound progressive. But do these corporations’ actual activities contradict their outward-facing social responsibility?
Greenwashing is one of the many ways that a corporation might use social responsibility as a marketing gimmick, as opposed to an actual business practice. Some companies care more about their image than how environmentally responsible they actually are. Companies will also try “washing” their image using other forms of supposed social responsibility. Pinkwashing refers to making a company look “gay-friendly” on the outside, as many will use Pride parades to advertise and dress up their brand in rainbows. Pinkwashing can also mean using women’s rights to make a corporation look more responsible, as well as giving small proceeds to breast cancer research (check out the pink fracking drill bit for a quite literal example of pinkwashing – an accidental parody of itself).
Banks and greenwashing
Banks are some of the most shocking promoters of greenwashing and pinkwashing. Despite the many dubious activities that they finance, their unethical activities often get ignored in favour of their lip-service to environmental and social causes.
Greenwashing isn’t just used for marketing. In fact, the most common response to 350 Aotearoa’s protests and opposition to banks’ unsustainable business practices have been, “but we got a sustainability award!”, “we invested $xx into renewable energy,” and so on. They actually use their surface-level social responsibility to combat very important and valid criticisms about damaging corporate behaviour.
If you were to believe the awards, Westpac goes above and beyond when it comes to environmentally friendly practice. They won the Global 100 “Most Sustainable Business in the World” award despite having $12.2 billion in investments in fossil fuel projects since 2008. But if you look closer, the award only accounts for Westpac’s in-office practices and philanthropy – things like recycling and office energy conservation, or investing in renewable energy.
So why is, for example, Westpac’s investment in clean technology taken into account, but not their investment in dirty energy? What we see, then, is that externalities – social and environmental damages and costs that aren’t factored into a business’s finances – are not only ignored by the businesses themselves, but also by the organisations that measure how sustainable and socially responsible they are.
According to Westpac’s Climate Change Position Statement, “moving to a low carbon economy means a fundamental transformation in our energy infrastructure.” They focus on their “direct” carbon footprint, which they say has reduced by 40% since 1996 – but this only measures the energy that their operations use. If they were to include the carbon footprint of their investments in fossil fuels since 2008, the picture would look very different.
Then there’s the pinkwashing. Westpac claims to be a big supporter of gender equality and takes pride in their percentage of women in leadership roles. But how is leading a company that helps destroy the climate beneficial to women? We need to consider the women impacted by Wesptac’s behaviour, instead of only the women in executive positions at the corporation. Women are disproportionately impacted by climate change globally, especially when they are poor. So how can a company that directly finances climate-destroying industries claim to support women’s rights?
ANZ – even worse
What happens when you funnel twice as much money as Westpac into coal, gas and coal projects – a whopping $24.7 billion? You get sustainability awards! In addition to being on the same “Global 100” list that Westpac was on, ANZ is part of the Down Jones Sustainability Index and the Ethibel Sustainability Index (ESI) Excellence Global, among other things.
ANZ has no interest in withdrawing their funding for fossil fuels, stating that they will continue to support the coal industry during the “transition” to renewables, and that coal will continue to be a necessary part of the energy economy in the “short to medium term.” They intend to continue financing coal power plants that “use advanced technologies,” despite the fact that even the “cleanest” coal is still carbon-dense and contributes significantly to climate change.
In addition, ANZ boasts about “strengthening the financial position of women” while putting women’s livelihoods and health at risk due to climate change. Over the past few years, their Pride day “GAY-TMs” – ATMs decorated with rainbow exteriors – very literally showed a surface-level support for the LGBTQ+ community. Just like for women, LGBTQ+ people are especially vulnerable to the impacts of climate change, yet our communities are used as feel-good fodder for ANZ’s pinkwashing schemes.
Don’t be fooled
It is sad that corporate greed manages to pervert humanity’s most admirable qualities – concern for our communities and environment. We must think critically about a business’s intentions when it makes claims of social responsibility. It is easier to think of companies as being a source for good in our society – but the truth is far more complicated and insidious.
Let’s never forget what is really necessary for an environmentally and socially sustainable world: actions that address the root problems. Don’t be fooled by a nice-looking facade.