Nice words in corporate capitalism - business, sustainability, and social justice

By Charlotte Villiers, 8 July 2020

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Charlotte Villiers is Professor of Company Law at the University of Bristol

As economies strive to grow and new ways of working are fast emerging, words such as ‘sustainability’, ‘well-being’ and ‘social justice’ feature prominently in the debates. Are these discourses likely to result in concrete and substantial changes for the better? Experience with activities identified with other nice words such as ‘corporate social responsibility’ (CSR) or ‘stakeholder capitalism’ might dampen our hopes for positive transformation. Indeed, CSR came to be embraced by corporations as its focus shifted from a moral or ethical perspective towards being viewed as connected to a firm’s market outcome and a business case could be made for it. There is little evidence that CSR has led companies to behave noticeably more responsibly. Indeed, corporate capitalism drives companies to frame problems in ways that limit their ability to resolve them, their primary concerns being really to avoid risks and to seek opportunities to grow their income and profits. The risk is that sustainability will also be utilised as an opportunity to enhance the company’s business possibilities and prospects, rather than as a force for positive planetary well-being and social justice.

The insufficiency of nice words

Language is important. Open-ended, warm-glow words are attractive, but they often lose in the battle with a corporation’s hunger for profits, because they are susceptible to different interpretations and multiple definitions. Indeed, the concept of sustainable development has evolved over several decades, and sustainability has many different possible features to define it. The main divergence is that between planetary or community sustainability, on the one hand, and that of the sustainability of the corporation through its long-term growth, on the other. These different understandings of sustainability give rise to different priorities, leading to a tension between focusing either on planetary risks, including environmental, human and social risks, or on the risks specifically relevant to the corporation or an industry.

Similarly, different interpretations cause social justice to be prone to different strategies and applications with power given to those who control the resources and technologies and how they might be used. In the context of sustainability, social justice may be connected to global and intergenerational justice as well as ecological notions of justice, adding a further layer of complexity. Such complexities are recognised in discussions around the implementation of the 17 Sustainable Development Goals which are likely to interact with each other in both positive and negative ways, inevitably giving rise to trade-offs. Furthermore, as has been recognised, these interactions will also depend on factors such as geographical context, resources, time horizons and governance (Nilsson, et al, 2018). 

Obstacles to sustainability

At a more grounded level, numerous systemic obstacles block sustainability goals. Internally, complex corporate structures enable exploitative practices such as tax avoidance and supply chain slavery. These complex structures obfuscate who is responsible for which actions, giving corporate actors freedom to behave as they wish without fear of challenge or recourse. External structural weaknesses prevent effective checks on corporations as they are largely regulated by use of soft law, lacking enforceability.

The COVID-19 crisis has highlighted many inequalities and structural problems across global and local communities. In spite of inspiring reflections (e.g. Eisenstein, 2020) on how we might improve well-being of workers and citizens as we recover from the crisis, tensions and contradictions are likely to manifest themselves in our collective responses. Already, for example, as the COVID-19 emergency caused lockdowns and restrictions on our freedoms and behaviours, it was clear that the essential ‘key workers’ were many of those who have largely been the least valued workers in ‘normal’ pre-COVID times, paid the lowest wages and subject to poor, often insecure,  working terms and conditions. Yet, even as the pandemic continued, many such workers, viewed as ‘heroes’, were given (in the UK) inadequate protective equipment, and as the lockdowns were eased, other low status workers, such as those in the retail and hospitality sectors, came out of the protection of furlough payments to be told that they had lost their jobs. So much for their well-being when it has to compete with corporate financial demands.

A different economic orientation is necessary

How might these problems be resolved? It is necessary to shift to a different economic orientation. There are many alternative economic pathways being developed that address some of these problems and tensions. These include, Kate Raworth’s Doughnut Economics, (2017) which explores the economic possibilities of living within the planetary boundaries, and Banerjee and Duflo’s Good Economics for Hard Times (2019), which seeks to show how problems such as poverty and inequality can be tackled with inclusive and compassion economic solutions. Another possible starting position might be to move away from the primary economic goal of growth, as expounded in E.M Schumacher’s Small is Beautiful (originally published in 1973) or even to emphasise degrowth as suggested in different ways in D’Alisa and Kallis (eds), Degrowth – a vocabulary for a new era (2015), opposing industrialization and development activities if they contribute to environmental destruction (Robra and Heikkurinen, 2019, at 4).

A degrowth agenda would require radical reorganization, meaning not only changing production and consumption but also societal reorganization to achieve necessary ecological changes and to protect future generations (ibid, at 3). Connected to this might also be the size of corporations. Researchers have found that smaller companies operate more responsibly than large companies, seemingly because they are more proximately close to their stakeholders and therefore are more willing to act on their CSR claims in order to gain the acceptance of those stakeholders (Wickert, et al 2016). A related observation is that small, innovative firms are often more prepared to change and operate sustainably than large firms (Shevchenko, et al, 2016). It is also necessary to tackle the corporate power structures. This requires grass roots action, trade union action, and collective global organisation (Cachelin and Rose, 2018).

Nice words get distorted and become poisoned by a culture of greed that overrides the stated good intentions. Complex problems cannot be solved only with nice words. It is necessary to confront the push for economic growth and the power relationships that accompany the pursuit of profit – urgently.


Tags: Social Justice and Sustainability
Published July 8, 2020 12:57 PM - Last modified Aug. 25, 2022 10:56 PM