National College of Ireland

Project Submission Sheet

Student Name: SHOURJYA SENGUPTA

Student ID: X23113022

Programme: MSc. In International Business Year: 2023-2024

Module: Corporate Governance Business Ethics & CSR

Lecturer: Finlay Ursula

Submission Due 11/12/2023
Date:
“Corporate Social Responsibility can be used to ‘green-wash’ commercial activity”. Does the literature
Project Title: on Corporate Social Responsibility support this contention?

Word Count: 3760

I hereby certify that the information contained in this (my submission) is information pertaining to research I conducted for
this project. All information other than my own contribution will be fully referenced and listed in the relevant bibliography
section at the rear of the project.
ALL internet material must be referenced in the references section. Students are encouraged to use the Harvard Referencing
Standard supplied by the Library. To use other author's written or electronic work is illegal (plagiarism) and may result
in disciplinary action. Students may be required to undergo a viva (oral examination) if there is suspicion about the validity of
their submitted work.

Signature: Shourjya Sengupta

Date: 7 – December – 2023

PLEASE READ THE FOLLOWING INSTRUCTIONS:

1.Please attach a completed copy of this sheet to each project (including multiple copies).
2.Projects should be submitted to your Programme Coordinator.
3.You must ensure that you retain a HARD COPY of ALL projects, both for your own reference and in case a project is lost or
mislaid. It is not sufficient to keep a copy on computer. Please do not bind projects or place in covers unless specifically
requested.
4.You must ensure that all projects are submitted to your Programme Coordinator on or before the required submission
date. Late submissions will incur penalties.
5.All projects must be submitted and passed to successfully complete the year. Any project/assignment not submitted will be
marked as a fail.

Office Use Only

Signature:

Date:

Penalty Applied (if applicable):

1
 Table of Contents

What is Corporate Social Resposibility....................................................................................................................................3

Green Washing Concept..........................................................................................................................................................3

Are the Green Starbucks Cup recyclable..................................................................................................................................4

Ryanair made misleading statements......................................................................................................................................4

Carroll’s Pyramid of Corporate Social Responsibility ..............................................................................................................5

How CSR influence on an organization....................................................................................................................................7

Advantages and Disadvantages……………….......................................................................................................8

The evolution from CSR to ESG…………………………………………………………………………………………10

CSR vs ESG……………………………………………………………………………………………………………….10

Why ESG is replacing CSR……………………………………………………………………………………………...11

Conclusion…………………………………………………………………………………………………………………12

Bibliography.........................................................................................................................................................13

2
 What is Corporate Social Responsibility?

CSR or Corporate Social Responsibility, is a pathway which gives direction to an

organization to move towards ethical, sustainable and socially aware, impacting not just only
making a business profitable but also, to create a bigger impact in terms of influencing social
and environmental aspects positively. To get in depth understanding, CSR is also strategies
and initiatives to make this planet an eco-friendly by reducing greenhouse gas emission,
conservation of energy, waste management and sustainability by promoting conservation of
biodiversity and reduction of ecological footprints by increased usage of eco-friendly
resources.
Also, CSR addressed the social welfare and responsibilities by promoting diversity in
workforce and better quality in terms of work culture inside the organization. Companies
often engage themselves in philanthropic initiatives such as supporting education and
healthcare and other welfare programs for the development of any community or individual.
Moreover, ethical business practices are also one of the fundamental aspects of CSR where a
company / organization takes care of all the Laws and Regulations, honesty and transparency,
compliances and adherence to human rights and procurement of raw materials for the
business.
Engagement with the stakeholders is also one of the crucial factors of CSR. A company earns
more value and trust when the organization gives importance to feedback and suggestions
from employees, customers, vendors, and local communities to enhance the mutual
relationship. CSR is often addressed as non-profit initiative but on the contrary, it improves
employee morale and productivity, social awareness in the community and making this world
better and sustainable.

What is “Greenwashing” as a concept?

Undoubtedly, there is a rising trend where organizations are considering environmental and
social impact and as a result, they are more focusing on the sustainability credentials.
Greenwashing is a deceptive marketing strategy where a company misleading people into
believing that their products or services are sustainable in terms of social and environmental
aspects but on the contrary, the company is not even slightly aligned to it. Hence, the
phenomena when organization adapts this as a strategy by falsely creating a business value in
the market, creating a false trust among the customers by tactically using words like “green”,
“natural”, “eco-friendly”, etc. is termed as Greenwashing.

Few of the common tactics used by the company –

i. Companies often make claims with words like “natural”, “ecofriendly”, “green” to
prove their false credibility towards sustainability whereas the company will have
no substantial evidence to prove their false claims.

ii. Organizations often gives incomplete information, where they exaggerate the
eco-friendly aspect of any product, whereas probably the same organization is
using a substance which may be banned for several years. E.g. A company using
an image of a tree or recycling logo in their product whereas there is presence of
harmful products which are ignored completely.

3
Greenwash is in a way an illusion which is created by an organization without any significant
efforts. As a result, this undermines the trust / loyalty between consumers and companies.
Several third-party companies or regulatory bodies have come up with the outlook to
minimize this unethical practice in general, where these regulatory bodies have outlined
certain guidelines which the organization needs to stick to and also, they are asked to provide
evidence related to the efforts, so that companies can stick to their commitments towards
creating a meaningful impact towards sustainable environment and social well-being.

Are the Green Starbucks cups recyclable?

As per Starbucks report in 2019, it started focusing more on green cups and packaging, which
made them claim that they are making a goal to utilize 20% post-consumer fiber (double) by
2022, whereas they were using 10% recyclable content for cups and packaging as on the
mentioned status. Also, they stated that they have achieved a rate of 2.8% in terms of
reusability in certain company operated stores like US, Canada, and few others, which means
that they used to offer discounted rates for customers who would bring back their cups for
refilling or using ceramic cups offered by the store itself. On the contrary, as per the Trash
audit report conducted in Canada in 2019, Starbucks was ranked in the top 5 most polluting
brands.
Also, conventional Starbucks cups are lined with a substance called polyethylene to sustain
the hot liquid and to prevent any sort of seepage. While the inner liner solves the problem but
the mixture of the substance used to manufacture is highly difficult (almost impossible) to
recycle. So the question stands head held high questioning the authenticity of the claim made
by such a big organization. (Goddard, 2020)

Ryanair made misleading green statements!

Ryanair in their website used to advertise about the CO2 compensations schemes where they
used to charge a compensatory amount to the flyers as a contribution to “Fly greener to….”
scheme which was later removed after the investigation of Netherland’s Authority for
Consumer and Market (ACM). As per ACM, “Airlines may
offer CO2 compensation schemes, but they cann
compensation will make flying sustainable.” In
simpler words, business should be more honest and transparent, as air mode
of travelling will always be highly polluting. (Jackman, 2023)

4
 Carroll’s Pyramid of Corporate Social Responsibility

Fig 1: Carroll’s Pyramid

Carroll’s pyramid of Corporate Social Responsibility is a model that indicates the

responsibility of a company towards the well-being of the society. This theory was introduced
by Archie B. Carroll , a management scholar in the early 1990s. As mentioned, this model
depicts a hierarchical aspect of 4 different social responsibilities which an organization holds
to various stakeholders and to the society. (Carroll, 2012)

i. Economical Responsibilities: At the base of the pyramid lies the economic

responsibility of an organization which is to generate revenue and profit, as no
company or organization would sustain without self-generating revenue or profits
which would directly earn profits to the stakeholders and investors of the company
itself. In today’s era, for a company with a vision of long-term sustainability the
first and foremost important aspect is to structure an efficient strategy like, cost
management, investments, marketing, etc. by the company itself which would
directly create value to the shareholders and investors for future growth.

E.g. Amazon & Apple are the biggest examples of economic success. The sole
focus of these 2 organizations’ is profitability which leads to growth and
sustainability. Its continuous focus on generating revenue enables a company to
focus on innovation, Research and development, and expansions. By generating
substantial revenue and profits both of these companies fulfill its economic
responsibility to the stakeholders and investors.

ii. Legal Responsibilities: The next layer of the pyramid is aligned towards the legal
aspect, basically compliances of several laws and regulations. Businesses with an
outlook of making profit, they must look forward to operating within the legal

5
 boundaries which are established by the governments. Undoubtedly, this is a very
broader spectrum for an organization, but this ensures that an organization is
operating in an honest, ethical and transparent manner. This includes adherence to
industry-specific regulations, national and international regulations (if any). In the
long run these legal responsibilities help a company to add value to its business
and protects the interests of the shareholders and the investors.

E.g. Coca-Cola is one of the best examples for maintaining ethical responsibilities
as one of the leading global brands by complying all the necessary laws and
regulations across all the countries. It ensures adherence to all sort of norms
related health and safety, labor laws, regulations related to global supply chain,
product quality regulations. Also, Coca-Cola follows strict adherence to
packaging and labelling regulations, and beverage ingredients comply with local
and international laws.

iii. Ethical Responsibilities: Moving up the pyramid is the ethical responsibility

where the company is expected to go beyond the legal responsibilities and focus
more into morale, honesty, transparency and integrity. This responsibility expands
to what is right and acceptable in terms of morale which is not mandated by the
law. Often this thin line of difference between legal and ethical responsibilities
come up as a tricky aspect where legal expectations are bounded by the ethical
premised, but the ethical expectation is a much broader spectrum. Companies
should prioritize more on ethical decision makings, treating stakeholders fairly,
avoid conflict of interest, and most importantly values the human rights and social
justice.

E.g. The Body Shop is recognized for its ethical stance on animal testing and
environment sustainability. The company use natural ingredients supporting fair
trade practice and actively promotes against animal testing in beauty testing
industry. Hence, it’s commitment sticks to ethical values influencing it’s product
and business culture.

iv. Philanthropic Responsibilities: At the topmost part of the hierarchy is the

philanthropic responsibility which is a company’s voluntary contribution to the
well-being of the society. This effort goes beyond the legal and ethical obligations
where the organization involves in giving back to the community by organizing
several campaigns or activities like, charitable donations, environmental
conservation efforts, supporting education, community development program,
healthcare initiatives and several others. This donations or gift are not
responsibilities in literal sense, but this is in general an expectation of the people
or the consumer from the company towards to the society which anyhow adds
value in the relation between consumer and the company itself.

E.g.
The bill & Melinda Gates Foundation, founded by Microsoft’s co-founder Bill Gates
and his wife Melinda. The Gates foundation works voluntary
philanthropic activities by addressing global health issues, attention to poverty
alleviation, health issues, right to education and access to technology.

Carroll’s pyramid of hierarchy suggests that a company should first fulfill their fundamental
economic and legal responsibilities followed by ethical and philanthropic responsibilities. In

6
a way these 4 different levels of responsibilities are somewhat inter-related, for example,
ethical behavior leads to legal compliances and positive social impact, which is directly
affecting (in a positive way) the reputation and success of the company. However, several
critics argued on the simplicity of the linear hierarchy, compared to modern era’s business
complexities but Carroll’s hierarchy undoubtedly gave us a framework of the fundamental
obligation of an organization towards the society in a more sustainable and responsible
manner.

How CSR influence an organization?

Corporate Social responsibilities mostly influences an organization in a positive way. It paves

a way for a company to long-term success, reputation and relationship with the stakeholders.
Here is a comprehensive understanding of how CSR impact positively along with some
examples are sited below:

 Enhanced Brand Reputation: Patagonia, an outdoor apparel company, is widely

recognized for focusing on eco-friendly materials, fair labor practices, etc. which
proves its commitment to environmental sustainability and ethical business
practices. As an organization they have also taken part in initiatives on ethical
sourcing of raw materials and donating a percentage of the profit to environmental
causes. Through several campaigns like “Don’t Buy This Jacket”, “Buy Less, Demand
More”, this brand has gained a huge reputation as environment responsible brand.
As a result, this positive image attracts environment conscious consumers and
reinforced customer loyalty.

 Improved Employee Engagement and Retention: Salesforce, is known for it 1-1-1

model where they contribute 1% of their product, equity and employee time to
philanthropic activity. This commitment to giving back to the society attracts
employees who look forward to purpose-driven work. Also, this creates a positive
impact in the workplace culture, enhanced employee morale, which leads to higher
retention rate and efficient productivity.

 Increased Customer Loyalty & Attraction: TOMs, an US based company introduced

“One-for-One” business model, where the company used to donate a pair of shoes
for a sell of every single pair of shoes in their retail stores to the child in need. The
company believed in it sales by word of mouth and centering its business focus in
Corporate Social Responsibility. This socially responsible approach attracts a huge
amount of customer who aligns themselves with the mission and built a huge loyal
customer base.

 Stakeholder Engagement & Trust: Microsoft, takes part in CSR in terms of

Philanthropic aspect where they engage their stakeholders to address social issues.
They actively involved their stakeholders in campaigns like education, access to
technology, healthcare and environment sustainability. As a result, this builds a trust
among employees, customers, communities and investors as the stakeholders are
directly involving for contributing the well-being of the society.

7
Advantages –

 Profitability & Brand Value: When a company focus on energy conservation and
usage of recycling raw materials, they cut down a significant portion of
operational costs and
benefits the environment. CSR also improves company’s accountability as
organization becomes more ethical in terms of investments and because of more
transparency between stakeholders, media and consumers it increases its business
value. As a result, its value in the market rises resulting in increase in the company’s
stock value.

 Better customer relation: As per a survey by a branding company Landor Associates,

there are majority of customers (77%) are inclined towards companies with good
reputation in terms of CSR. Strangely, even customers are willing to pay 10% higher
price for companies who are socially responsible and contribute for the societal
improvement.

 Employee satisfaction and Reputation: Research states that CSR is a positive impact
on employee satisfaction and retention. This originates from better working
environment, increased motivation from CSR activities and overall increased
company reputation. Employees often consider CSR as in index before recruitment
analyzing their contribution towards the society.

Disadvantages-

 Cost Involvement: CSR initiatives often requires involvement of funds. For small
companies (10-100 workforce) it is not possible to allocate a budget for CSR
activities. For a small company, maybe they have to hire extra personnel to take care
of the CSR activity which also incur cost involvement.

 Conflict with the Profit Motive: Maintaining the balance between maximizing
profit and attaining CSR goals is not impossible but can be very challenging. Most
CSR initiative will not fetch immediate increased profits in terms of output.
Investment in a social or environmental cause by any organization may takes time to
yield return in future. There comes the conflict of motive between the stakeholders,
who are focused on immediate financial gains and the CSR commitments.
This view led Nobel-Prize
winning economist Milton Friedman to write a classic article with the title: "The Soc
Responsibility of Business Is to Increase Its Profits."

 Customers are wise to Greenwashing : CSR can lead to greenwashing when

companies do not engage themselves in genuine and authentic efforts for social and
environmental well-being and on the contrary, they use CSR as a tool for marketing
their image as a business. This can be done by false claiming about their CSR
programs or, by delivering incomplete information, or by exaggerating the positive

8
 effect of the CSR initiatives. Hence when a company engages in such thing, it might
cause as a backfire on the company, where the investors and consumers will lose faith
on the company which leads to reduced reputations, sales and profits altogether.

 Difficult in Measuring Impact: Quantifying or measuring the impact or output from

the initiatives of CSR is very challenging. There is no measurable metric established
to measure the success of CSR programs/campaigns justifying their tangible benefits.

Despite of all the challenges, companies can navigate these by strategic planning,
transparency, and effective communication. Companies should see CSR as a long-term
investment for sustainability and considering it as a part of broader business strategy which
will eventually maximize the benefits of responsible business practices.

"The Social Responsibility of Business Is to Increase Its Profits."

The argument that “The Social Responsibilities of Business is to Increase Its Profits” was
stated by the noble prize awarded economist Milton Friedman, in The New York Times in
1970. The statement is aligned to the idea that a company’s sole responsibility is to be loyal
to the shareholders and the goal is to maximize profits within the limitations
of the law and ethical
regulations.
As per Freidman, business should entirely focus on generating revenues and distributing the
dividends to the shareholders and in this course if any of the shareholder’s funds are utilized
for any other course of action which does not directly contribute to generate profit is
considered as a misuse of shareholders’ funds.

This argument's proponents highlight a few points:

 Economic Efficiency: They contend that by emphasizing profits, companies spur

economic expansion, provide jobs, and indirectly advance public welfare through
promoting commerce.

 Legal and Ethical Boundaries: Companies must abide by ethical standards and operate
within legal frameworks. Any behavior outside of these parameters could be
interpreted as a violation of fiduciary obligations to shareholders.

 Competitive Markets: In a competitive market, businesses that prioritize profitability

can attract investment, remain competitive, and innovate, which benefits society
through product development and technological advancements.

However, critics contest this viewpoint for a few reasons:

 Narrow Focus: Critics contend that concentrating just on maximizing profits ignores
the effects on society. In addition to shareholders, businesses have other stakeholders,
including as consumers, workers, communities, and the environment, whose interests
should also be considered.

 Long-Term Sustainability: Making decisions that jeopardize long-term sustainability

can result from placing too much emphasis on short-term earnings. Ignoring social
and environmental obligations can lead to negative effects on society, legal risks, and

9
 reputational harm, all of which can have an adverse effect on a company's long-term
profitability.

 Changing Expectations: As stakeholders increasingly demand ethical business

practices that go beyond profit-making, society's expectations of firms have changed.
Businesses that incorporate social and environmental factors frequently have long-
term sustainability and competitive advantages.

Even while the discussion persists on, more people are realizing that companies may make
valuable contributions to the environment and society at large. Nowadays, a lot of businesses
take a comprehensive strategy, seeing that profitability and social responsibility can coexist
and support one another in order to achieve long-term, sustainable success. (Friedman, 1970)

The Evolution from CSR to ESG !

Environmental, social, and governance is referred to as ESG. In ESG frameworks,

these are referred to as pillars
businesses are
required to report on. ESG seeks to encompass all non-financial risks and possibilities
that are present in
the normal course of business. Global issues that our world is facing include
climate change, the shift from a linear to a circular economy, rising inequality, and striking a
balance between the requirements of society and the economy. Companies are under growing
pressure from investors, regulators, customers, and workers
to be effective stewards of not just
money but also natural and social capital, and to have the appropriate governance
structure in place to enable this . As more and more investors
include environmental, social, and governance (ESG)
factors into their investment decision-making,
ESG is becoming more and more
significant from the standpoint of obtaining debt and equity funding.

CSR vs ESG

 ESG would not exist without CSR, yet the two are not at all interchangeable. ESG
standards quantify a company's efforts, whereas CSR seeks to hold it accountable.
Since CSR initiatives differ greatly throughout companies and industries, comparable
indicators are hard to come by. However, ESG activities can usually be measured to a
substantially greater extent.

 CSR includes a wider variety of voluntary actions that a business does to make a
beneficial impact on the environment and society. It encompasses charity, moral work
standards, community service, environmental initiatives, and more. CSR is a symbol
of a business's dedication to going above and beyond the call of duty to advance
social welfare. ESG, or Environmental, Social, and Governance, assesses a company's
performance in three main categories, with an emphasis on corporate governance,
sustainability, and behavioral integrity. It involves looking into a company's
governance procedures, stakeholder interactions, and environmental effect.

 CSR and ESG provide distinct avenues for communication. A CSR framework may
assist a business in more effectively communicating its values to stakeholders and
workers, improving the workplace and increasing the likelihood of noticeable
community outreach. A corporation may demonstrate to present and future investors
that its efforts towards social, environmental, and governance responsibilities are
yielding positive results by using an ESG framework. (KAŹMIERCZAK, 2022)

10
 Fig 2: Relationship between Sustainability, CSR and ESG

Why ESG is replacing CSR?

It is important to make clear that ESG (Environmental, Social, and Governance) has
developed to aid and strengthen CSR (Corporate Social Responsibility) in certain
circumstances, most notably in the analysis and decision-making of investments. Here are a
few explanations for the rise in popularity of ESG:

 ESG standards are especially made to match the interests and goals of investors. As
they want to provide money to businesses that exhibit great ESG performance,
investors are considering more and more ESG variables when making investment
decisions. This is because they believe that these companies may be more robust and
sustainable in the long run.

 Compared to CSR, ESG offers a more standardized and quantifiable foundation. It

provides precise measurements and standards for assessing a business's social
policies, governance, and environmental effect, making cross-company comparisons
and analysis easier.

 Investors can detect and reduce risks related to environmental, social, and governance
concerns by using ESG research. Poor ESG practices can expose a company to
operational, reputational, or legal risks that could negatively affect its financial
performance. For this reason, ESG research is essential to investors' risk management.

 The market for ethically conscious investment is expanding. Investing in firms that
share their values and make beneficial contributions to society and the environment is
becoming more and more appealing to investors, particularly younger generations and
institutional investors.

 ESG elements are seen to be markers of a business's resilience and long-term

sustainability. Strong ESG performance is viewed as a sign that a company is more

11
 prepared to meet problems in the future and seize opportunities in a changing business
environment.

Even if ESG factors are becoming more and more important in some areas, like investment
analysis, CSR is still important and relevant for businesses to show their wider commitment
to ethical behaviors and social welfare. While ESG hasn't entirely replaced CSR, it has given
investors a more precise and quantifiable framework to assess facets of a company's
sustainability and governance. In order to promote ethical business practices and sustainable
development, both CSR and ESG are crucial.

CONCLUSION

Corporate Social Responsibility (CSR) is the term used to describe a business's commitment
to moral behavior, environmental sustainability, and social welfare. It increases stakeholder
connections, boosts brand trust, and stimulates innovation. Businesses that prioritize
corporate social responsibility (CSR) develop inclusive communities and environmental
protection through a cascade effect of positive change. This dedication promotes resilience
and long-term profitability in addition to societal advantages. In the end, corporate social
responsibility (CSR) is more than simply a duty; it's a driver of revolutionary change that
unites corporate success with a more promising and sustainable future for everybody.

12
Bibliography
Goddard, S., 2020. [Online]
Available at: https://greenthatlife.com/green-starbucks-cup-green-or-greenwashing/
Goddard, S., 2020. [Online]
Available at: https://greenthatlife.com/green-starbucks-cup-green-or-greenwashing/
Jackman, J., 2023. [Online]
Available at: https://www.theecoexperts.co.uk/blog/worst-examples-of-greenwashing
Carroll, A. B., 2012.
KAŹMIERCZAK, M., 2022. A LITERATURE REVIEW ON THE DIFFERENCE
BETWEEN CSR AND ESG.
Friedman, M., 1970. A Friedman doctrine‐- The Social Responsibility of Business Is to
Increase Its Profits. The New York Times.

13