Corporate Social Responsibility as a Driver of Sustainable Innovation: Greening Initiatives of Leading Global Brands

By Yoon, Eunsang; Tello, Steven | Competition Forum, July 1, 2009 | Go to article overview

Corporate Social Responsibility as a Driver of Sustainable Innovation: Greening Initiatives of Leading Global Brands


Yoon, Eunsang, Tello, Steven, Competition Forum


EXECUTIVE SUMMARY

Corporate commitment to sustainable innovation is triggered by a number of driving forces such as the increasing environmental concern of the public and customers, the advancement of environmental technologies, the enforcement of government regulations and the pressure of social activism. The emerging business culture of social responsibility also drives corporations to become proactive toward sustainable innovation. Being environmentally responsible helps corporations reduce their exposure to social criticism and appeal to the customers looking for green products and services. This paper briefly reviews the literature on the drivers of sustainable innovation and explores the recent industry practice of strategic transition to sustainable innovation through a case analysis of leading global brands claiming to be socially responsible business entities.

Keywords: Sustainable innovation, Social responsibility, Global brands

INTRODUCTION

Facing the increasing environmental challenges in today's global business market, corporations are proactively or reactively engaging in strategic initiatives toward environmental protection and resource conservation. Corporate commitment to sustainable business programs are driven by a number of external and internal forces, including customer demand for environmentally sound products, technology advances supporting sustainable innovation, government regulations for environmental control, social activism toward environmental concerns as well as an emerging business culture of social responsibility.

The notion of social responsibility often lies behind corporate commitment to sustainable innovation. For example, the 3M Company mission statement declares a comprehensive commitment to environmental protection, social responsibility and economic progress (www.3m.com). Canon, Inc. proposes "living and working together for the common good" as a corporate philosophy leading toward a full commitment to environmentally conscious management through innovative technologies, environmental evaluation systems and the adoption of initiatives that reduce the environmental burden of business activities (www.canon.com). Bank of America accepts, as a core corporate responsibility, the need to care for "business activities threatening the long-term sustainability of the economy, prosperity and the way of life" (www.bankofamerica.com). This paper briefly reviews the literature on the drivers of sustainable innovation, focusing on the practice of corporate social responsibility, examines different approaches towards corporate commitment to sustainable innovation through a case study of leading global brands, and discusses strategic and managerial implications from a benchmarking perspective.

KEY DRIVERS OF SUSTAINABLE INNOVATION

Our research focuses on the impact of five drivers of sustainable innovation: government intervention, social activism, customer demand, technology advance and CSR initiatives. While it is possible to expand the discussion to other drivers, these drivers are observable from outside an organization, supporting external review and analysis, and are closely related to corporate response and strategy concerning sustainability.

Daly and Portnoy (2004) argue that, without external intervention, the environment will not sustain a quality level of living for all. Economic growth should be controlled to conserve natural resources since unregulated markets neglect essential needs for public goods, externalize a significant portion of real production costs and lead to monopoly control over resource allocation. Simpson et al. (2004) observes that governments exercise regulations and incentives not only to protect the environment but also to promote the competitiveness of the economy. Public policies in favor of environmental R&D have provided corporations with incentives to avoid damaging the environment while preserving the competitiveness in the market although, in the short run, corporate compliance with government regulations requires financial resources. …

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