Corporate Sustainability Leadership

Peter A. Stanwick, Sarah D. Stanwick

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781351024969
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Corporate sustainability, now regarded as a vitally important topic on the agenda for businesses, has in recent years not only become embedded in postgraduate study, but is now also widely taught at the undergraduate level in business schools. Corporate Sustainability Leadership reflects the growing need for an accessible text at all levels of study. The book brings the topic of corporate sustainability fully up to date by incorporating new directions in the areas of corporate responsibility and sustainability.

Written by the authors of the highly successful Understanding Business Ethics, this book provides a primary resource for any undergraduate or graduate corporate sustainability class. Unlike other textbooks in corporate sustainability, which are often edited collections from multiple authors, this book develops themes throughout each chapter using a consistent voice to ensure an integrative learning experience for both students and instructors. With ten chapters and ten cases, all of which are supplemented with online test banks, instructor guides, and PowerPoint slides, this textbook provides enough content for a complete class on corporate sustainability.

Using stakeholder theory as a foundation, Corporate Sustainability Leadership allows readers to develop a better understanding of how organizations can effectively satisfy the needs of their critical stakeholders. It addresses the issues of corporate sustainability from both a micro and macro perspective. Micro issues related to corporate sustainability include leadership, organizational change, management decision making, human resource organizational strategies, organizational ethics, organizational culture, corporate sustainability reporting, corporate sustainability performance, and corporate compliance. The macro issues addressed include suppliers, corporate sustainability communications, consumers, the natural environment, governments, NGOs, and the developing world. In addition, there are ten unique company cases from organizations that are household names, such as Bayer, Shell, Volkswagen, and Dow Chemical.

1 The role of corporate sustainability in today’s society

Introduction

Just as society has evolved over time, so have the responsibilities of corporations. The role of corporate sustainability in a firm is a dynamic one in which managers must constantly address the ever-changing needs of its stakeholders in order to ensure the firm’s long-term sustainability. In this opening chapter, a number of fundamental concepts related to corporate sustainability are addressed. These concepts include: how business titans from the past addressed philanthropy and corporate sustainability; the evolution of corporate sustainability; why corporate sustainability is important for firms; the criticisms related to corporate sustainability; conscious capitalism; the corporate sustainability pyramid; the description of stakeholder theory; the identification of critical stakeholders; stakeholder engagement; stakeholder dialogues and corporate sustainability; and stakeholder theory and corporate sustainability. The chapter begins with an opening vignette discussing Merck’s philanthropic actions related to curing river blindness. The chapter finishes with a description of Merck’s unethical actions related to its painkiller Vioxx.

Opening vignette: Merck’s effort to cure river blindness

Onchocerciasis, which is commonly referred to as river blindness, occurs in fast-flowing rivers that provide a breeding ground for blackflies. Blackfly bites can transmit worms into the human body. The worms grow into adults and cluster in nodules to produce large quantities of young worms. The young worms cause inflammation in the human body, leading to itching, blindness, epilepsy, and premature death.¹ River blindness historically has occurred in 36 countries in Africa, Latin America, and Yemen.²

A scientist for the Kitasato Institute in Tokyo, Dr. Satoshi Omura, discovered a bacterium called Streptomyces which was able to kill the parasites causing river blindness. Dr. Omura sent samples of the bacteria to Dr. William Campbell who worked for Merck pharmaceuticals. Dr. Campbell developed the drug Ivermectin from a compound in the bacteria culture sent by Dr. Omura which could be used to cure river blindness.³ The drug was a variant of Avermectin, which was originally developed to kill parasites in dogs.

The development of the drug was championed by Roy Valgelos at Merck who had been promoted to Chief Executive Officer from his previous position as head of research.⁴ In 1987, Merck announced that it had formed a partnership with the World Health Organization (WHO) to distribute the drug for no charge under the brand name of Mectizan for as long as the drug was needed to fight the disease. This was a critical decision for Merck to make since most of the people who needed the drug could not afford to purchase the drug.⁵ The drug is taken in one dose and paralyzes and sterilizes the parasitic worms. The worms can survive in a human body for many years and can grow to the length of two feet while producing millions of larvae. The drug cannot reverse the disease of individuals who are already blind, but it can stop people from becoming blind due to the disease.⁶

In 1998, Merck expanded its Mectizan program to include the treatment of Lymphatic Filariasis (LF), which is also known as Elephantiasis. LF occurs through parasitic infection from mosquitoes and damages the body’s lymphatic system. LF results in the swelling of the limbs and genitals. It is estimated that more than 1.3 billion people are at risk of being infected with LF with 30 percent of the projected cases occurring in Africa.⁷

The goal of the Merck program is to try to eliminate river blindness globally by 2025. An estimated 37 million people suffer from river blindness with a majority of the cases occurring in 29 countries in Africa.⁸ By 2017, the WHO verified that in four Latin American countries, Colombia, Ecuador, Mexico, and Guatemala, river blindness has been eliminated in the country. The Mectizan program reaches 250 million people annually and over 2 billion treatments have been administered between 1987 and 2017.⁹ In 2015, Dr. Satoshi Omura and Dr. William Campbell shared the Nobel Prize in medicine for their work on the development of Ivermectin.¹⁰

What is corporate sustainability?

Corporate sustainability can be defined as the ability of firms to integrate social and environmental issues into their operations through interaction with stakeholders on a voluntary basis.¹¹ As a result, the objective of corporate sustainability is the ability to address the needs of the firm’s direct and indirect stakeholders without limiting the ability of the firm to address the needs of future stakeholders.¹²

The corporate sustainability model is based on the interconnectedness of the principles of social responsibility, the process of social responsiveness and the subsequent policies that are developed in order for the firm to address social and environmental issues. A corporate level strategy related to corporate sustainability allows firms to adapt to changing societal conditions. Firms have a social contract based on specific rights and obligations. It is through this social contract that the behavior of the firm conforms to the expectations and objectives of society and properly addresses the needs of all of its stakeholders.¹³

The foundations of contemporary philanthropy and corporate sustainability

Derived from the Greek word “philanthropic,” meaning “to love people,” contemporary philanthropy can be defined as any voluntary act in the giving to individuals and/or organizations to promote the common good.¹⁴ The foundation of corporate sustainability can be traced back to the philanthropic commitments of wealthy individuals from the nineteenth century. The belief of these individuals was that they had a “duty” to use their accumulated wealth to aid those in need.

The philanthropy of two Robber Barons

It is the duty of the rich man to use “all (of his) surplus revenues … in the manner which, in his judgment is best calculated to produce the most beneficial results for the community … The man who dies rich, dies disgraced”¹⁵ (Andrew Carnegie).

Andrew Carnegie

By the end of the 1800s, Andrew Carnegie had become the richest man in the world through his controlling interest in the steel industry, and his company, United States Steel. Carnegie was also involved in building bridges and railroad cars. He did not initially have extensive knowledge of the steelmaking process, but he was able to identify and hire men who were experts in the field. When he retired in 1901, he started to distribute his surplus wealth to those in need. His initial focus was on colleges and libraries. While Ivy League schools such as Cornell, Harvard and Princeton all wanted Carnegie to give money to their institutions, Carnegie favored small colleges and historically black colleges. Carnegie not only liked the curricula and the composition of the students in these colleges, but he also believed that these students were truly motivated to succeed since they made many sacrifices to obtain a college degree.

When Carnegie died in 1919, he left $23 million to his family and gave the rest of his wealth to various foundations and educational institutions he established from 1901 to 1911. He donated $125 million to the Carnegie Corporation of New York Foundation. The mission of this foundation was “to promote the advancement and diffusion of knowledge among people of the United States.”¹⁶ The Carnegie Corporation of New York was only one of many philanthropic projects of Carnegie. Other projects included the creation of the Carnegie Institute of Technology, which would later become Carnegie Mellon University, as well as the establishment of programs supporting workers and the promotion of cultural activities. One of the more unique projects was the Simplified Spelling Board which promoted the simplified spellings of common words. Carnegie spent $350 million on philanthropic projects, which was estimated to be equivalent to $8.12 billion in 2009 dollars.¹⁷

His most famous contribution to the arts was Carnegie Hall in New York. While on his honeymoon on board a ship from New York to London, Carnegie met Walter Damrosch who was the conductor and musical director of the Symphony Society of New York. Damrosch told Carnegie of his dream to have a beautifully designed concert hall in New York. When Carnegie laid the cornerstone of the concert hall in 1890, he proclaimed that Carnegie Hall “is built to stand for ages, and during these ages it is probable that this hall will intertwine itself with the history of our country.” Carnegie Hall’s Opening Night was May 5, 1891.¹⁸ It cost $1.1 million to build, which would be equivalent to $515 million in 2012.¹⁹

John D. Rockefeller

From early in his career, John Rockefeller was determined to control every step in the process connected with refining crude oil. His greatest ambition was to earn $100,000 and live for 100 years. He acquired numerous oil companies that would eventually become the Standard Oil Corporation and held monopoly control of the oil industry in the United States. In 1911, Standard Oil was forced to break up into several smaller companies due to the passage of the Sherman Anti-Trust Act in 1911. The foundations of oil companies that were formed after the federal government forced Standard Oil to be dissolved include the currently trading oil companies: ConocoPhillips, BP, Chevron and Exxon-Mobil. Rockefeller became the world’s first billionaire in 1916 (which would be $30 billion in 2014). When Rockefeller died in 1937, his assets were equivalent to 1.5 percent of the total economic output of the United States. His estimated net worth when he died was equal to $340 billion in 2014.²⁰

Rockefeller’s philanthropic philosophy was based on his religious values. He donated $35 million to the Baptist seminary which would eventually become the University of Chicago. Rockefeller focused on what he called “wholesale philanthropy.” Wholesale philanthropy would focus on contributing major donations to produce solutions to major societal problems. The establishment of the Rockefeller Sanitary Commission focused on solving public health issues. The first major initiative of the Commission was an attempt to eliminate hookworms affecting people living in the southern United States. At the time of the initiative, an estimated half of the population of North Carolina and another estimated 6 million people in eight other southern states had hookworms.

One of the symptoms of hookworms was being lethargic, creating the assumption that people from the south were lazy. The cause of the hookworms was poor hygiene and the only available cure at the time was for the infected people to use thymol capsules as a cure. The federal government was unwilling to pay to improve the hygiene conditions of the affected communities in order to eliminate the threat of hookworms. Through Rockefeller’s financial commitment to medical research to reduce the cost of the thymol capsules, the capsules were developed for a reduced cost of 50 cents a dose. Rockefeller focused on medical research as a driving force for his wholesale philanthropy and used Johns Hopkins University...

Table of contents

• Cover
• Half Title
• Endorsements
• Title Page
• Copyright Page
• Table of Contents
• 1. The role of corporate sustainability in today’s society
• 2. Leadership and organizational change and corporate sustainability
• 3. Corporate sustainability and management decision making
• 4. Human resources and corporate sustainability
• 5. Organizational strategies and corporate sustainability
• 6. Ethics and organizational culture
• 7. Corporate sustainability reporting, performance, and corporate compliance
• 8. Suppliers, governments, and NGOs
• 9. Corporate sustainability communications and consumers
• 10. Corporate sustainability and the natural environment
• Case studies on corporate sustainability
• Index