CSR

02/11/2020

Transitioning to a sustainable economy: businesses and their environmental responsibility

Environmental responsibility is an increasingly important issue and represents an opportunity to grow and relaunch the economy. Has the Covid-19 emergency jeopardised this approach?

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Corporate Social Responsibility: doing business responsibly

The European Commission defined corporate social responsibility (CSR) as follows in a 2011 communication: “the responsibility of enterprises for their impacts on society”. A company (of whatsoever size and especially if it is a large company) has responsibilities that go beyond profit growth. It should not just produce a product or a service but should do so accountably.

Corporate Social Responsibility can be understood as the way a company returns the resources it has used in its business to society

CSR means sustainable development: a company policy that incorporates social and environmental goals alongside financial targets. The former are part of a company’s environmental responsibility, an issue that has gained prominence over the years.

A sustainable production system needs to comply with a series of regulations that define ceilings capping energy consumption and atmospheric emissions. These include parameters for various aspects of business life: production, product conception, packaging, transport, waste disposal, environmental practices at sales outlets and energy consumption. In addition, employees and consumers need to be informed about these issues.

From the linear to the circular economy

In recent years, the whole environmental issue has started to gain the attention it deserves. International movements, such as Greta Thunberg’s “Fridays for Future” have thrust the issue into the spotlight and onto governments’ agendas.
Governments are starting to consider more concrete solutions to issues mainly caused by population growth and the shortage of raw materials. While the current linear production system is based on the exploitation of raw materials, the concept of a circular economy is gaining momentum especially in Europe. The Ellen MacArthur Foundation, a US foundation set up to encourage the transition to a circular economy, has defined the circular economy as restorative and regenerative by design.

The circular economy is underpinned by three main principles:

- Reduction of the use of raw materials, choosing to design products with a long lifespan that require little maintenance;

- Re-use of products to avoid their disposal and give them a second life;

- Recycling to recover raw materials that become secondary raw materials, with the same characteristics as the original raw materials.

The circular economy is a system in which all activities, starting from extraction and production, are organised so that someone’s waste becomes a resource for someone else

What differentiates the circular economy from the linear economy?

The product cycle ends with consumption in the linear economy: the product becomes waste and the never-ending cycle of extraction, production, consumption and waste disposal starts again. Conversely, the circular economy is based on recycling and recovery within a system where someone’s waste becomes a resource for someone else, rather than just being eliminated.
While the concept of a circular economy has been around since as far back as the 1970’s, it is now very topical and almost futuristic in certain aspects: the 2030 Agenda for Sustainable Development, signed by the governments of 193 countries members of the UN in 2015, encompasses many targets in this direction. Sustainable Development Goal (SDG) 12 Responsible consumption and production includes, inter alia, the sustainable management and efficient use of natural resources, halving global food waste and substantially reducing waste generation.

When green marketing becomes greenwashing

The choice to incorporate environmental issues in a company’s code of conduct is an assertion of its accountability but also an excellent way to promote its reputation. This is because society’s awareness of environmental issues continues to grow meaning that consumers are more attracted to brands that are demonstrably committed to protecting the planet. Accordingly, many companies have refreshed their communication strategies to incorporate the new environmental policies. Green marketing (the marketing of products that a company deems environmentally friendly for a variety of reasons) is not only a production decision and good practice but is also a marketing strategy in step with the times and the demands of the market. Strategies rolled out by companies to minimise their environmental footprint, reducing the negative effects and maximising the benefits to the environment, do not simply mean the launch of an environmentally friendly product or product line. A good green marketing strategy requires a company’s choices to reflect its overall environmentally-friendly orientation: sustainable production processes, the responsible disposal of waste, recyclable packaging as well as consumer awareness campaigns.

Consumers have great expectations of brands: they want to feel engaged, to be an active participant. They want to buy environmentally friendly products and feel that they have contributed to the cause

The risk of a half-hearted adoption of a green marketing policy where a company only pays lip service to its concepts to satisfy its customers is that it becomes an end in itself and is effectively greenwashing. Greenwashing is when a company wrongfully promotes itself as being environmentally friendly: the company introduces “green” marketing policies solely to attract customers. However, this becomes counter productive when the customers realise that the information provided by the company about the products or services they are buying is inaccurate or indeed untrue: greenwashing not only does not benefit the environment but can actually have the opposite effect as it encourages customers keen to contribute to the cause to buy products or services which are not actually environmentally friendly. This approach can also harm the company as it adversely affects its brand reputation, even when done in good faith.

A well-known example of greenwashing is San Benedetto, which was fined €70 thousand for unfair commercial practices. Its slogan “less plastic, more nature” was considered to be misleading as it could not be proven that the bottles actually had the 30% less plastic claimed nor that their production achieved energy savings.

Green companies

While greenwashing is a real risk (sometimes adopted intentionally as a misleading commercial practice), there are also praiseworthy examples of companies that engage in green marketing and stand out for their environmental commitment with their innovative products and solutions.

Lush, the natural cosmetics company, has sent a clear message about the use of plastic: when possible, it provides no packaging of its products. It uses recycled materials for other products and the bottles used as containers are made of 100% recycled materials. The first Lush Naked Shop was opened in Milan in 2018 offering only “naked” products, i.e., without any form of packaging.
Another excellent example is McDonald’s Corporation which has set itself the ambitious goal that the packaging of its products shall come from recycled, certified and 100% renewable sources by 2025. It also aims to recycle all the packaging thrown away in its restaurants.
A third example is Adidas which had designed a product line made of recycled plastic as part of a partnership with Parley for the Oceans. Their objective is to only use recycled polyester by 2024.

The large and small companies testing the waters in the green marketing field are growing in number and demonstrate the rising awareness of the issue at all levels.

Environmental sustainability in Italy

Italy is well-placed in the European field of environmental sustainability. In 2015, it was one of the 193 signatories of the 2020 Agenda for Sustainable Development. While it has not yet achieved the Agenda’s goals, Italy has made significant progress towards their achievement.

The 2020 report of Alleanza Italiana per lo Sviluppo Sostenibile (ASviS - Italian Alliance for Sustainable Development), which raises awareness of environmental issues, showed that Italy is one of the leaders for clean energy generation and organic farming. Italian investments in products and technologies to lessen the environmental impact have increased (355,000 companies involved) and the results are clearly visible: GHG emissions decreased by 15% from 2010 to 2017 while the recycling percentage has improved from 36.7% to 49.4%.

The public health emergency and the green economy

2020 has been unique in many ways, and will probably go down as the watershed between pre- and post-Covid-19 times. On the one hand, the public health emergency has drawn attention to environmental issues: the lockdown has had a positive impact on the environment with the reduction of pollution levels and the regeneration of flora and fauna. Copernicus Sentinel - 5P, a satellite orbiting the Earth to monitor the Earth’s surface, shows us how the concentrations of nitrogen dioxide (NO2) in the atmosphere have plunged since the beginning of the year due to the application of the safety restrictions imposed by Covid-19. Cities like Milan and Rome recorded a 45% drop in NO2.

However, these positive achievements risk being wiped out. The danger is that, in an economy trying to get back on its feet after being pummelled by the pandemic, environmental protection measures may be set aside in favour of kick-starting the economy and perhaps also due to the population’s financial uncertainty.
However, the economy’s relaunch should not be decoupled from the green economy. Edoardo Ronchi, president of the Fondazione per lo Sviluppo Sostenibile (Foundation for Sustainable Development), a reference point for the green economy’s main sectors and players, made an interesting comment: “When the costs are many and the resources are always limited, disregarding the green revolution is risky. What is important now is not to generate future higher costs. Disregarding environmental issues now might seem like saving money, but it will cost us a lot more in the future”.

Not investing in the green economy means missing out on opportunities to grow and protect our world

The whole environmental issue should be considered as a driver of economic growth and not a hindrance. The International Renewable Energy Agency (IRENA), an international organisation which promotes the sustainable adoption of renewable energy, has estimated that if massive investments were to be made in renewable energies, this would create 42 million new jobs, four times the current number of jobs. Global growth would benefit to the tune of USD98 thousand billion.

71% of people consider climate change as big as crisis as the Covid-19 pandemic

The decision not to invest in the green economy in a time of crisis may initially prove to be beneficial but it will have long-term repercussions. What if the pandemic of today is the climate crisis of tomorrow?