Corporate Responsibility and Climate Change
August 07, 2019
For years prior to the public learning of the scandal, Volkswagen had been promoting “Clean Diesel” as an alternative to hybrid or electric cars. They had built up this image of an environmentally friendly brand, and they would do anything to preserve that image, even if it they were lying to their customers. Aside from their brand image, Volkswagen would not be able to sell their cars in the US without the defeat devices. The Environmental Protection Agency’s regulations would prevent the sale of Volkswagen’s diesel cars in the US. If they were not allowed to sell in the US, they would be sacrificing a large part of the car market. Volkswagen chose profit and defeat devices over being honest and environmentally friendly.
As the effects of climate change have become more prevalent, the discussions about solutions to it have become more prevalent as well. Global warming is on course to reach 1.5°C between 2030 and 2052 and human activity is estimated to have contributed to 1°C of the global warming. It is easy to only think of it on a small, local level in terms of recycling and what we can do as individuals. But at the same time, there are large businesses that should have some responsibility in climate change and be held accountable for their individual impact on the environment. As in the Volkswagen case, regulatory pressures, such as EPA regulations, are not always affective in implementing climate change strategies in the automotive industry.
Every day consumers rely on big companies and corporations to live; from the cars they drive to the coffee they drink. People don’t often think about the impact these products have on the environment. Rather, they are more concerned with the quality of the products themselves. Therefore, the burden falls on companies to decide if they want to concern themselves with their impact on the environment. Companies can begin to think about their environmental impact by conducting an energy audit, switching to reusable items, choosing green materials, and adopting an in-office recycling program. However, companies are for-profit, and the bottom line is always their main concern, so spending money on environmentally friendly measures is not always a priority. For these profit-maximizing companies, there is a contradiction between a responsibility to minimize their impact on the environment and their financial priorities. For those companies, the cost of implementing plans for environment outweighs the benefit they receive. For some companies, environmental morality is not on their list of responsibilities, and therefore it is not addressed.
Fortunately for the environment, there is an intersection between companies reducing their environmental impact and doing something that is beneficial for their investors and their profit. As conversations around climate change grow, the everyday consumer is looking to buy products from companies who have a focus on the environment. Therefore, shareholders and financial analysts are assigning more value to companies that have taken a leap in dealing with climate change. Companies who take steps towards limiting their footprint are able to use their efforts as a marketing tool to attract consumers to their brand. This thinking has fueled initiatives such as ‘Beyond Petroleum’ from BP and ‘Ecoimagination’ from GE. While the company sees it as a way to boost profits, it simultaneously helps the environment. Despite the motives, companies’ actions are beneficial to the environment.
Some popular companies have already overlooked the initial financial cost to think about the environment. In 2018, Starbucks committed to eliminating their single-use plastic straws in favor of strawless lids and non-plastic straws. The company plans to eliminate plastic straws from its restaurants globally by 2020. Further, for every kilowatt-hour of electricity Google consumed in 2017, Google purchased a kilowatt-hour of renewable energy from a wind or solar farm. The company’s contributions make them the first public company of its size to have achieved this.
While those companies are taking genuine steps to lower their environmental footprint, the intersection of business and the environment is not simple. There may always be companies like Volkswagen that may try to trick the system in attempts to appear environmentally friendly.
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