Global Business Citizenship

Business and Society Review

109:1

67–87

© 2004 Center for Business Ethics at Bentley College. Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

Blackwell Publishing LtdOxford, UKBASRBusiness and Society Review0045-3609© 2004 Center for Business Ethics at Bentley College200410911000Original ArticlesBUSINESS AND SOCIETY REVIEWLOGSDON

Global Business Citizenship: Applications to

Environmental Issues

JEANNE M. LOGSDON

. . . benefiting as it does from the collective exploitation of eco-system services and non-renewable resources on an enormousscale, the international corporate sector will ultimately need torecognise the essentiality of sustainability as a concept, evenfor the continued viability of its own corporate activities. Thissector should be expected, in time, to develop measures whichgo beyond the basic requirements of environmental and humanrights law and to adopt, individually or collectively, standardsof practice which lead the way in the quest to achieve truesustainability.

Santillo and Johnston, 1999

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Businesses can create environmental problems for society in virtu-ally all facets of their operations. While government regulations andminimum environmental standards are necessary to reduce negativeenvironmental externalities, the need and desire for voluntarybusiness initiatives to improve environmental quality continue togrow. Firms engage in voluntary environmental improvements for avariety of reasons, including management’s values, concerns aboutfirm reputation, and cost reduction. The challenge for managers ofglobal corporations today is to find the optimal level of environmentalperformance that takes into account environmental realities,

Jeanne Logsdon is a Professor at the Anderson Schools of Management at the University ofNew Mexico.

68 BUSINESS AND SOCIETY REVIEW

fundamental ethical principles, and stakeholder needs in additionto economic costs and benefits and legal requirements. As indicatedin the opening quote, addressing this challenge is increasinglyimportant and consistent with the long-term self-interest ofbusiness organizations.

Global Business Citizenship (GBC) has been proposed as acomprehensive theoretical framework for guiding managers inmaking responsible decisions wherever they operate.

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This articlewill explore how to apply GBC to the important area of environmentalperformance. After briefly reviewing the GBC framework, I willexamine some of the central ideas about environmental performanceand how progressive companies have begun to incorporate envi-ronmental sustainability into their operations. The GBC modelprovides a framework for understanding these examples. Along theway, various challenges will be identified and suggestions made forhow to deal with them.

GLOBAL BUSINESS CITIZENSHIP

Global Business Citizenship is a set of policies and practices thatallow a business organization to abide by a limited number ofuniversal ethical standards (called hypernorms), to respect localcultural variations that are consistent with hypernorms, to experi-ment with ways to reconcile local practice with hypernorms whenthese are not consistent, and then to implement systematic learningprocesses for the benefit of the organization, local stakeholders,and the larger global community.

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This definition may sound like thetraditional concepts of corporate social responsibility and corporatesocial responsiveness, and indeed it has much in common withthese traditional concepts. What is different?

GBC was developed in the late 1990s to distinguish the socialresponsibility and responsiveness concepts from corporate citizen-ship, which was the term increasingly being used to connote a varietyof good corporate social practices.

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Conceptual confusion wasapparent about whether corporate citizenship was the same as ordifferent from social responsibility and responsiveness. The term“corporate social responsibility” had evolved during the 1960s to the1980s to encompass four categories of responsibilities: economic,legal, ethical, and philanthropic.

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This more sophisticated view of

JEANNE M. LOGSDON 69

social responsibility succeeded in putting to rest the old debateabout “economic vs. social.” The “social responsiveness” termentered the lexicon in the 1970s to focus attention on processes ofimplementation within large firms.

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The term “corporate citizenship”had a history in both scholarship and business usage of meaningcorporate community relations, which included good-neighboractivities such as philanthropic contributions.

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Thus, it seemed toolimited to encompass the increasing agenda of corporate socialresponsibility on the global scale. But it was clear that “corporatecitizenship” had attracted much positive business attention in the1990s.

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What was not clear was whether these executives wereunderstanding the term to mean the broad, values-based socialresponsibility concept or a community-relations focus, which couldextricate them from taking on greater responsibilities for theimpacts of their decisions and activities.

At the same time, we (Kim Davenport, Patsy Lewellyn, DonnaWood, and I) became intrigued with the concept of “citizenship” as aguide to what business organizations as citizens might be respon-sible for. However, we quickly discovered that citizenship is not asimple and straightforward concept that has the same meaning foreveryone. In fact, it has been subject to many interpretations overthe centuries as cultures, societies, and nations have evolved. At thepresent time, there are different understandings and preferencesabout what a human citizen is and should be, depending uponpolitical ideology and other factors. We found Parry’s distinctionsbetween minimalist, communitarian, and universal rights perspec-tives particularly useful.

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The business organization as citizen canalso be viewed according to these three perspectives. It is clear to usthat the minimalist view characterizes neo-classical economics andagency theory, and a narrow view of corporate citizenship as focusedon good community relations is representative of communitarian-based citizenship. But the more comprehensive view of firmsoperating everywhere according to principles of social responsibilityand ethics needs a term that is unambiguous, and we have identified“global business citizenship” as that term. GBC has both normativeand instrumental dimensions. Normative arguments underscorethe critical importance of ethical analysis and decision-making.Instrumental arguments explain the “business case” for GBC asconsistent with, and even necessary for, an organization’s economicsuccess.

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THE GBC PROCESS

A general process model to specify the steps in operationalizing theGBC concept has been developed and is presented in Figure 1:

Step 1—Code of Conduct/Corporate Policies.

To be a good busi-ness citizen, a company must identify its basic values and how toimplement them. A company’s basic values may be found in acompany credo or a mission statement, but these documents may notreflect completely the company’s ethical standards. By formulatinga code of ethical conduct that reflects sound and widely accepted

FIGURE 1 The Global Business Citizenship Process Model

Source: D. J. Wood and J. M. Logsdon, “A Global Business Citizen-ship Process Model,” in Proceedings of the Thirteenth AnnualMeeting of the International Association for Business and Society,ed. D. Windsor and S. Welcomer, pp. 82–85.


ethical principles (hypernorms), the company can more easilyprovide specific guidance for situations that organizational memberswill typically encounter. Hypernorms are fundamental commonprinciples that are found in virtually every contemporary culture,major religion, and statements agreed upon by nations to guidehuman behavior, such as “killing innocent persons is wrong.”

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Codes of conduct vary in orientation, format, and scope. In someorganizations the code of conduct is a statement of basic ethicalprinciples with no applications; in other organizations, it is a set ofrules that serves as an operational guide to behavior but withoutgrounding in fundamental principles. It is important that both theunderlying ethical principles and how they are applied be apparentto users of the code. A useful code of conduct will cover normalbusiness functions and operations (e.g., safety practices; purchas-ing) and will deal with situations that are specific to the firm or itsindustry (e.g., hazardous chemical use in semiconductor chipmanufacturing). It is also crucial that manuals of standard operatingprocedures or organizational routines reflect what is in the code ofethical conduct. Top management must be clear and consistentabout how it perceives the organization’s responsibilities and dutiesto stakeholders in all company documents if it expects the organiza-tion to act as a good business citizen.

Step 2—Implementation.

Managers are typically expected toimplement the global code of ethical conduct in all the variouslocations where a company does business. Presumably and ideally,in most cases there will not be significant conflicts or gaps betweenthe guidelines of the code and local customs, cultural norms, ornational standards because the company’s values, code of conduct,and corporate policies have been well designed. However, operatingmanagers have to be conscientious in making judgments. Theymust be aware of the problems that may arise by arbitrarily apply-ing the company code in cases where customs or local standardsare in conflict. Or, there may be unintended consequences fromimplementing the company code that will create problems forstakeholders or ethical dilemmas for the company that were simplynot addressed or foreseen in the code itself. Engaging in stake-holder dialogue and being open to feedback about code imple-mentation are important sources of information to responsiblemanagers about whether the company’s actions are effective and


acceptable. If problems surface, managers should be prepared tomove to Step 3.

Step 3—Problem Analysis and Experimentation.

Cases in whichcompany codes of ethical conduct cannot easily be applied requirethe analysis and experimentation of Step 3. These cases mayinclude situations where unintended negative consequences becomeapparent or where local custom diverges substantially from thecompany code, and where local managers need to analyze whetherthese differences should be resolved in favor of the code or not. It isespecially useful in this analysis to have an in-depth understandingof the hypernorms underlying the company code. It may be thatmanagers can find through experimentation a reasonable way toincorporate local customs and still be consistent with companystandards. In other cases, the manager may resolve conflict bysupporting the company’s code and will need to communicateclearly and respectfully to locals the reasons why this decision hasbeen made. Explanations that draw upon underlying hypernormscan be helpful here. Or, the local manager may need to communicateto headquarters about why a company policy should not be appliedand some alternative action is better in this case. Hypernorms canalso be helpful in articulating these reasons.

Step 4—Organizational Learning

is the essential last step in GBCimplementation. Local implementation (Step 2) as well as problem-solving and experimentation (Step 3) will best serve society and theorganization’s purposes when the firm institutes feedback loopsand learns systematically from all its experiences. Systematiclearning involves grasping the structural and normative similaritiesand differences among the various situations the transnationalcorporation encounters in its many locations, extracting the essenceof these experiences, and providing models or exemplars of whatworks and what doesn’t work in terms of adapting and experiment-ing with hypernorm implementation. It also involves altering theguidelines of the code itself when it becomes apparent that certainaspects of the code cannot reasonably be implemented.

Application of the GBC model is challenging in a number of ways.One challenge relates to the problem of multiple goal attainment.Managers face pressures to meet many goals at the same time andmust deal with contradictory demands and expectations with some


type of “satisficing” approach. Another challenge is that stakehold-ers themselves are not necessarily consistent in their judgments,needs, and desires. Looking for guidance from stakeholders createsits own problems when different stakeholder groups disagree. Timingand time frame also make a difference. An action that meets imme-diate goals may have significant long-term negative consequences.Uncertainty about the nature of consequences also contributes to thechallenge of acting as a good business citizen. Social-psychologicalbiases may also influence judgments about what is fair and whoshould benefit.

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Nevertheless, managers must make decisions every day thatrequire thoughtful understanding of what the company expects,what stakeholders expect, and what is the ethically appropriatecourse of action. The GBC framework is intended to help managersat various levels in the organization sort out the issues and system-atically move through a process to make the optimal decision, andthen to help organizations learn from managerial experience.

BUSINESS AND THE NATURAL ENVIRONMENT

Environmental sustainability is the ongoing challenge to ensurethat current and future generations will have adequate naturalresources to survive and thrive. Such resources include sufficientsupplies of clean air, clean water, habitat for human and wildlife,and minerals and other physical materials necessary for life onearth. Until the mid 1900s, there did not appear to be many envi-ronmental limitations on business growth, but over the past halfcentury scientific evidence of environmental degradation and thecontributions of business activity to the decline in environmentalquality has become indisputable. In every industrialized nation acomplex regulatory regime establishes environmental standardsand rules for sources of pollution. Compliance with these rules hasyielded much progress for control of the regulated pollutants. Forexample, between 1970 and 1987 annual lead emissions in the U.S.declined 96% (from 203.8 million to 8.1 million tons).

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Morerecently, the amount of toxic chemical releases from the NAFTAcountries (Canada, Mexico, and the U.S.) declined by 5% between1995 and 2000, a period of significant economic growth.

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But thestate of the natural environment continues to concern many people


because of intractable local issues (such as sufficient availabilityof clean air and water), uncertainty about environmental impacts(such as the unknown consequences of long-term pesticide use),and newly discovered problems of enormous scope (such as globalwarming). As the creators of economic activity, firms are often thesources of environmental problems, and they can also be affectednegatively by declines in environmental quality.

Some organizations have made good environmental performancea priority, expecting to exceed legal requirements by a large margin.These progressive organizations have evolved in their strategicorientation about the natural environment. Post and Altman iden-tified a general developmental model of corporate “greening” inwhich organizations moved through three phases. The first is an

adjustment

phase during which the organization makes changes inits current environmental processes on an ad hoc basis in reactionto changing legal and market requirements. The second is

adaptation

to incorporate environmental goals and policies beyond minimumrequirements to accommodate growing environmental awareness.The third phase is

innovation

to become fully proactive in institu-tionalizing environmental management in all business decisions.

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Their developmental model is reflected in Hart’s description ofthe three specific approaches that firms have demonstrated indealing with environmental issues—that is, a focus on

pollutionprevention

in the 1970s, to the

product stewardship

approach inthe 1980s, and then to

sustainable development

beginning inthe 1990s. According to Hart, these orientations are cumulativein that product stewardship requires effective pollution prevention,and sustainable development incorporates pollution preventionand product stewardship in addition to its higher level of environ-mental commitment.

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Empirical research has confirmed that firmsthat are strategically proactive are also advanced in incorporatingbetter and more comprehensive environmental activities into theiroperations.

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What factors account for evolving approaches and patterns to dealwith environmental issues? Post and Altman stressed the learningcomponent in this evolution. Hart (1995) focused on strategiccompetitive advantage as driving enlightened concern about thenatural environment. Rindova and Kennelly identified both learningand legitimation as critical factors.

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Ransom and Lober examinedpossible theoretical explanations for setting voluntary environmental


goals and found that firms were responding to stakeholder pressuresand institutional factors in joining an EPA initiative to voluntarilyreduce toxic emissions.

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Logsdon and Wood examine motivationsalong both normative and instrumental dimensions at the organ-izational, personal, and systemic levels.

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The GBC processencompasses all of these factors in guiding managers to adapt andinnovate in their continuing efforts to contribute to environmentalsustainability for both normative and instrumental reasons. Here ishow the GBC process can be applied to environmental issues, alongwith examples of good environmental performance.

Code of Conduct/Corporate Policies

In applying the GBC model to environmental issues facing anorganization, the first questions that organizational leaders need toask are: where can we find hypernorms that relate to our environ-mental responsibilities, and what are they? One important sourceof environmental hypernorms is the United Nations, specificallythe Declaration of the United Nations Conference on the HumanEnvironment, adopted in 1972, and the Rio Declaration on Environ-ment and Development, adopted in 1992. Table 1 contains a numberof principles from the Rio Declaration that might be considered asfundamental environmental values by top management.

As an example of selecting a hypernorm, the organization’sleaders may accept as a guiding hypernorm the Rio Declaration’sconcept of sustainable development “so as to equitably meet develop-mental and environmental needs of present and future generations”(Rio Declaration Principle 3). In fact, top executives in a number oflarge organizations have committed their organizations to supportthis ambitious goal.

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But how does the organization move from thisvery general goal to more specific guidelines for business practice?There are a number of paths available, and one that is becomingwidely known in the business world is The Natural Step, which wasdesigned in Sweden in the late 1980s through the efforts of Dr. Karl-Henrik Robèrt. The Natural Step is based upon the ethical principlethat destruction of the future capacity of the planet to support lifeis wrong. The Earth’s capacity to support life is dependent uponfour system conditions that have been affirmed by scientists asindisputably accurate and essential in order to achieve ecologicalsustainability:

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1) Substances from the earth’s crust must not systematicallyincrease in the ecosphere. (For example, metals and mineralsshould not be mined at a faster rate than they can be naturallyreplenished. Thus, we should conserve, recycle, and reusemetals and minerals to the greatest extent possible.)

TABLE 1 Hypernorms and Selected Environmental Principles

Rio Declaration on Environment and Development (1992):

Principle 1: Human beings are at the centre of concerns for sustainable development. They are entitled to a healthy and productive life in harmony with nature.

Principle 3: The right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations.

Principle 4: In order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it.

Principle 10: Environmental issues are best handled with the participation of all concerned citizens, at the relevant level. At the national level, each individual shall have appropriate access to information concerning the environment that is held by public authorities, including information on hazardous materials and activities in their communities, and the opportunity to participate in decision-making processes.

Principle 14: States should effectively cooperate to discourage or prevent the relocation and transfer to other States of any activities and substances that cause severe environmental degradation or are found to be harmful to human health.

Principle 15: In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.

Principle 16: National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.

Principle 22: Indigenous people and their communities and other local communities have a vital role in environmental management and development because of their knowledge and traditional practices. States should recognize and duly support their identity, culture and interests and enable their effective participation in the achievement of sustainable development.

Source: United Nations website, www.un.org/documents


2) Substances produced by society must not systematicallyincrease in the ecosphere. (For example, “unnatural” sub-stances such as plastic must not be produced at a faster ratethan they can be broken down and re-integrated into nature.We should pay much closer attention to waste disposal. Con-vert waste to inputs for other productive activities as much aspossible.)

3) The physical basis for productivity and diversity of nature mustnot be systematically diminished. (For example, destruction ofhabitat often reduces species diversity. Over-fishing the seasalso violates this condition of sustainability.)

4) If we want life to continue, we must have fair and efficient useof resources to meet human needs. Promoting justice will avertdestruction of resources. (For example, immediate survival needsdrive much destruction of the rainforests. Excessive consump-tion in the industrialized nations is not fair to future generations.)

A few proactive firms have begun to embrace these high standardsin ways that fit their operations, many of them in Sweden and otherWestern European countries (e.g., IKEA, Electrolux, Scandic Hotels).A U.S. exemplar that has received much favorable publicity forits commitment to The Natural Step is Interface, the commercialcarpet manufacturer and distributor. Interface’s chief executive RoyAnderson championed the effort to articulate a very ambitious goal—that Interface would be the first truly sustainable company in theworld, defining “sustainable” as meaning “taking nothing from theEarth and doing nothing harmful to the Earth.”

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Anderson inspiredhis company to take the lead in striving to transform itself and itsproducts by means of waste-free and pollution-free processes.

The next question is how to incorporate top management’sself-chosen basic environmental principles and values into thecompany’s operations. The method of doing so is highly contingentupon the nature of the organization. Some firms create codes ofethical conduct; others focus on sets of rules to cover specific func-tional areas (such as operations manuals, purchasing guidelines,etc.). It is crucial that the organization’s leaders examine typicalsituations where the hypernorm is relevant, just as they would dorisk management or issues management reviews. For example, RoyalDutch Shell and other energy companies extract and transportpetroleum, natural gas, coal, etc., from the earth and process these


raw materials into commercial products, which in turn must bedistributed and sold to end users. Their activities may jeopardizehuman health and local ecological stability along the many stepsin the process from exploration through retail sales. Their codes ofconduct, operations codes, or whatever format they use to commu-nicate management principles need to explicitly affirm the generalprinciple of the Rio Declaration and indicate clearly how it shouldbe applied in company operations worldwide.

An example of a company code that has evolved in recent yearsbecause of stakeholder pressures and thoughtful top managementreview is British Petroleum’s Commitment to Health, Safety andEnvironmental Performance, one of its five basic business policies.The current statement is found in Table 2. The statement is writtenin clear language and is unequivocal in its support for “no accidents,no harm to people, and no damage to the environment.” BP indicates

TABLE 2 British Petroleum’s Commitment to Health, Safety and Environmental (HSE) Performance

Everyone who works for BP, anywhere, is responsible for getting HSE right. Good HSE performance and the health, safety and security of everyone who works for us are critical to the success of our business.

Our goals are simply stated—no accidents, no harm to people, and no damage to the environment.

We will continue to drive down the environmental and health impact of our operations by reducing waste, emissions and discharges and by using energy efficiently. We will produce quality products that can be used safely by our customers.

We will:

• Consult with, listen to and respond openly to our customers, employees, neighbours, public interest groups and those who work with us

• Work with others—our partners, suppliers, competitors and regulators—to raise the standards of our industry

• Openly report our performance, good and bad

• Recognize those who contribute to improved HSE performance

Our business plans include measurable HSE targets. We are committed to meeting them.

Source: Taken from the booklet, “What We Stand For,” which is given to all staff by BP’s chief executive, John Browne. Available at the BP website, www.bp.com.


on its website that its health, safety, and environment expectationsare known to all employees and expected of all employees. Itsmanagement system includes thirteen elements of accountabilityagainst which managers are evaluated.

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Implementation

The next step shifts attention to local-area managers who receive thegeneral guidelines from headquarters and are expected to imple-ment them in an effective and efficient manner. The local managerhas many responsibilities, only one of which is protection fromenvironmental degradation. It may be that many decisions thatrelate to the environment are straightforward ones because equip-ment and processes have already been adapted to conform to thecompany’s guidelines. That is, processes are institutionalized intoorganizational routines that reflect good environmental stewardship.

However, the manager must reflect carefully in situationsinvolving values conflict, uncertainty, and inconsistencies amongcompeting goals. For example, there may be uncertainty aboutcause and effect. What should be done if a change in productionseems to occur at the same time that many fish begin to die in theriver or lake near the plant? Many managers in companies that donot support GBC or a hypernorm about environmental protectionmight ignore this coincidence, at least until external pressures (suchas the media or a regulatory agency) become formidable enough torequire action. The manager in a GBC company is likely to considerthe possibility that the plant’s operations may be the cause andbegin to investigate why the fish are dying.

A good example of how a company’s values support sustainabledevelopment involves Ford Motor Company’s design of environ-mental controls in its new plant in the state of Bahia in Brazil. Oneof Ford’s principles of environmental management is “transition tosustainability and eco-effectiveness”

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(p. 52), and it has identified anumber of steps throughout the company that it is taking to makethis transition. The Complexo Industrial Ford Nordeste (FordNortheast Industrial Complex) is located near Camacari, a city inBahia, on land where topsoil and vegetation had been removed.Ford has planted native vegetation on 7 million meters of land on andadjacent to the plant site. It collects rainwater into three new lakesdesigned to control runoff and also to provide habitat for wildlife. To


control sanitary wastewater and other sewage, it is designing asystem of wetlands constructed with soil, rice, water lilies, andcattails to purify water sufficiently to use in the facility’s gardens.This plant received the Social Value Award in the environmentalcategory by a Brazilian business newspaper. All of these activitiesdenote effective implementation consistent with Ford’s environ-mental principles.

Problem Analysis and Experimentation

Implementation may often be relatively straightforward, but whathappens when it is not? This is the arena of Step 3 in the GBCprocess where problems must be analyzed and various alternativesolutions tried until the problem is suitably resolved. There aremany types of problems that may occur. For example, a localmanager may realize that following the company’s code is going tobe much more expensive in his location because of environmentalconditions or it will cause serious negative consequences withinthe local community. Or, market and technological changes arepresenting the organization with opportunities to provide moreenvironmental performance to the customer than in the past, buthow much more is reasonable and feasible? Another type ofimplementation problem involves uncertainty about an enormouspotential environmental problem that the company cannot solvealone, but collective action is unlikely until far in the future. Howshould the company proceed? How can it contribute?

When managers realize that application of the company codewill create undesirable consequences for stakeholders, they need toconsider those consequences carefully. For example, a companymay have set an ambitious environmental goal of reducing solidwaste by 50% worldwide within 5 years. This goal may be desirableand attainable with positive consequences in most locales where thecompany has facilities. But one facility in a very poor community isan exception—in that community the very poor elderly populationget the job of collecting solid waste in order to earn a small income.In turn, they recycle all they can and use the rest for heating andcooking. Waste disposal has a social welfare dimension that is notsignificant elsewhere. What should this manager do?

An example of the second type of implementation issue involvesInterface, the commercial carpet maker. Interface’s big transformation


in the mid-1990s to The Natural Step was triggered in part by alarge potential customer requesting recyclable carpet. Recyclingcarpet raises many technical issues because it is traditionallypetroleum-based, rather than being made of natural fibers, andprocessed with dyes and other substances to reduce wear-and-tear.Depending upon usage and wear patterns, carpeting has to bereplaced frequently in high-use areas, such as hotel lobbies andparts of major office complexes. Frequent replacement is great forthe manufacturer, but results in a great deal of waste that getstossed into landfills. Looking for an innovative solution that wascompatible with The Natural Step, Interface pioneered the conceptof “leasing” carpeting (the “Evergreen Lease”) in which the customergets attractive carpeting with regular replacement in high-useareas, and Interface gets annual lease payments that cover the costof replacing sections that are worn or damaged. But what to do withthose worn sections of carpet? Through a number of pilot projects,Interface has reduced the amount of toxic dyes and other chemicalsin the carpeting so that it can be more easily recycled. It is alsofinding ways to cut waste in its own manufacturing processes withthe goal of having a closed-loop system—that is, the outputs fromone industrial process become inputs for another process.

Another type of problem that is more challenging occurs whenthe marketplace and public policy have not accepted the changesnecessary to deal with a serious environmental issue. A companymay be ready to respond and even lead, but its customers are notready to accept what the company believes is required. Globalwarming represents such a problem. It is a particularly difficultissue to deal with because of scientific uncertainty about long-term climate processes and the global, yet localized, nature of itsprojected impacts (changing temperatures, amounts of rainfall,sea levels, etc.). Collective-action qualities of the problem requireparticipation by all parties to a century-long (at least) abatementstrategy to reduce greenhouse gases (especially carbon dioxide fromuse of fossil fuels). Many ways to reduce these gases threaten theimmediate interests of powerful companies and nations.

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All thesereasons make it easier for a company to ignore and then resist callsto cut carbon emissions from its facilities and products than to doits part to deal with global warming, and this is what most largefirms did in the 1980s to mid-1990s while scientific data were beinggathered about the greenhouse phenomenon. Even today most


firms are failing to act. But a few leading companies have recognizedthe potential for great harm and are trying to figure out how to leadwhen most of their customers are reluctant to change their buyinghabits and preferences.

Companies in the energy and transportation sectors are particu-larly affected by the global warming problem. British Petroleum wasthe first energy company to publicly acknowledge the potential forsignificant climate change in a speech by its chief executive JohnBrowne at Stanford University in May 1997. He indicated that theprivate sector needed to become involved in dealing with potentialclimate change, and that BP intended to respond.

27 The companyneeded a baseline study to find out its greenhouse-gas emissionsbefore it could set goals for their reduction. It conducted anemissions audit and then established the first intra-companycarbon trading system with independent verification of reductions byauditing firm Ernst and Young. BP’s goal to reduce greenhouse-gasemissions by 10% by 2010 was achieved in 2002. The company’slong-term product strategy is to shift to natural gas and then torenewables for its energy products.

Automaker Ford joined BP in publicly acknowledging globalwarming as the most serious environmental problem facing thecompany and its industry in 1999, but it continues to face asignificant problem in terms of its product line vis-à-vis its cus-tomers, especially those in the U.S., where gasoline prices havebeen relatively lower than in most of the rest of the world. ThroughR&D projects, Ford has been developing a number of technologiesto make its vehicles more fuel-efficient and thus reduce greenhousegas emissions, e.g., through greater efficiencies in current enginesand through innovation to design fuel cell, hydrogen internalcombustion, hybrid, and battery-powered electric vehicles. It alsopledged in 2000 to improve average fuel economy of its SUV fleet by25% over the next five years.28 However, it wondered publicly in2002 whether “consumers, especially in North America, [are] trulyinterested in and willing to pay for new technology” (p. 9). Ford’ssales of SUVs and light trucks have grown significantly relative toits more fuel-efficient vehicles. This is good for Ford’s profitabilitybecause its SUVs and other light trucks have a higher profit margin,but bad for its products’ contribution to greenhouse gas emissions.Ford is engaging in many types of technical and public policy experi-ments to reduce greenhouse gas emissions, but its progress in


terms of average fuel economy is modest at best. One wonders ifFord can do more and should do more.

Organizational Learning

Finally, the organizational learning step would require divisional,local, and subsidiary managers to report back to corporate head-quarters on their efforts to operationalize the company’s environ-mental values and code of conduct, including the specific nature ofbusiness, social, and environmental conditions, problems encoun-tered, attempts (experiments) to overcome them, and results.Systematic analysis and comparison of typical and unique caseswill yield valuable insights on how best to handle certain kinds ofimplementation issues. The company will understand more clearlyunder what conditions it can implement specific technological,political, and management process solutions. Systematic com-munication will also feed back into environmental goal-setting andperhaps even the principles and language in the code of conduct.

Learning should be communicated both inside and outside theorganization. To protect its competitive advantage, the firm’sleaders may want to limit disclosure of the organization’s environ-mental performance to insiders. However, this policy may precludeattainment of extraordinary benefits to stakeholders that couldbe accrued by communicating its environmental successes—andfailures—outside the firm. Several international organizations areproviding venues for sharing environmental information. Forexample, SustainAbility, a UK think tank and consulting group,collects case studies on various sustainability and business suc-cess factors and makes them available on a sophisticated website,www.sustainability.com. The United Nations, through its GlobalCompact project, also invites submission of cases about experiencewith Global Compact criteria, which include protection of the naturalenvironment. It operates a Learning Forum to share knowledgeabout successful practices among businesses as well as to increasetransparency with stakeholders.29

Another approach to learning and communicating with stakehold-ers is by providing information about environmental performancein comprehensive sustainability reports. This is fast becoming thenorm among large global firms.30 Criteria for reporting have beendesigned with inputs from stakeholders as well as from executives


and business organizations so that the reports have credibility andcomparability. The Global Reporting Initiative (GRI) is probably themost widely known of these efforts to improve reporting of the totalrange of activities of an organization, including its economic, social,and environmental performance.31

SUMMARY AND CONCLUSIONS

Global Business Citizenship asks executives to be more comprehen-sive and expansive in considering their business responsibilities ascitizens of the planet. These responsibilities include accountabilityfor the impacts of their product and process decisions on the naturalenvironment and everyone dependent upon the natural environ-ment. Environmental impacts are of grave concern today in largepart because of growing production and consumption. Manyoptimistic observers believe that we will reach a crucial point in the21st century where populations in developing nations will be able toattain the high levels of consumption that we in the industrializedworld enjoy today. Environmental pessimists fear that this drivewill tax the Earth beyond its capacity to provide the resources forproduction and distribution and to absorb the waste and pollutionof 9 billion consumers.

Business executives will be given a large responsibility for pro-viding economic development that is also sustainable, especiallyin developing countries. Their voluntary environmental initiativesare needed to supplement generally weak governmental regulationsand poor environmental infrastructure. Global Business Citizenshipis intended to nurture these voluntary activities that are based uponfundamental ethical principles and stakeholder needs and thatultimately will benefit the corporate enterprise itself.

NOTES

1. See D. Santillo and P. Johnston, “Ethical Standards and Principles ofSustainability,” in Human Rights Standards and the Responsibility of Trans-

national Corporations, ed. M. K. Addo (The Hague: Kluwer, 1999), 367–368.2. For a complete description of Global Business Citizenship theory,

see D. J. Wood and J. M. Logsdon, “Business Citizenship: From Individuals


to Organizations,” in Ethics and Entrepreneurship: The Ruffin Series 3, ed.R. E. Freeman and S. Venkatraman, 59–94 (Charlottesville, VA: Society forBusiness Ethics, 2002); J. M. Logsdon and D. J. Wood, “Business Citizen-ship: From Domestic to Global Level of Analysis,” Business Ethics Quarterly

12 (2002):155–187.3. See J. M. Logsdon and D. J. Wood, “Implementing Global Business

Citizenship: Multi-Level Motivations and an Initial Research Agenda,” inInternational Corporate Responsibility: Exploring the Issues, ed. J. Hookerand P. Madsen (Pittsburgh, PA: Carnegie Mellon University Press, forthcoming).

4. See this argument developed in D. J. Wood and J. M. Logsdon, “The-orising Business Citizenship,” in Perspectives on Corporate Citizenship, ed.J. Andriof and M. McIntosh, 83–103 (Sheffield, England: Greenleaf, 2001).

5. See A. B. Carroll, “A Three-Dimensional Conceptual Model of Cor-porate Social Performance,” Academy of Management Review 4 (1979):497–505.

6. For the early history of the conceptual development of socialresponsibility and social responsiveness, see W. Frederick, “From CSR1 toCSR2: The Maturing of Business-and-Society Thought, and Coda: 1994,”Business & Society 33 (1994):150–166.

7. See A. B. Carroll, “The Pyramid of Corporate Social Responsibility:Toward the Moral Management of Organizational Stakeholders,” Business

Horizons 34 (July–August 1991):39–48; M. Sharfman, “Changing Institu-tional Roles: The Evolution of Corporate Philanthropy, 1883–1953,” Busi-

ness & Society 33 (1994):236–269; D. Logan, D. Roy, and L. Regelbrugge,Global Corporate Citizenship (Tokyo: Hitachi Foundation, 1997).

8. For example, see M. Alperson, Corporate Business Strategies That

Add Business Value (New York: Conference Board, 1995); M. McIntosh,D. Leipziger, K. Jones, and G. Coleman, Corporate Citizenship: Successful

Strategies for Responsible Companies (London: Financial Times, 1998).9. See Geraint Parry, “Paths to Citizenship,” in Frontiers of Citizenship,

ed. U. Vogel and M. Moran, 166–201 (New York: St. Martin’s Press, 1991).10. This is developed in Logsdon and Wood, “Implementing Global

Business Citizenship.”11. For a discussion of hypernorms, see T. Donaldson and T. Dunfee,

Ties That Bind (Boston: Harvard Business School Press, 1999).12. See, for example, M. Bazerman, K. Wade-Benzoni, and F. Benzoni,

“Environmental Degradation: Exploring the Rift Between EnvironmentallyBenign Attitudes and Environmentally Destructive Behaviors,” in Codes of

Conduct: Behavioral Research in Business Ethics, ed. D. Messick and A. E.Tenbrunsel, 256–274 (New York: Russell Sage Foundation, 1996).


13. Available U.S. data on lead emissions and other types of pollutantsfor the 1970s and 1980s can be found in the report of the U.S. Council onEnvironmental Quality, Environmental Quality: Twentieth Annual Report

(Washington, DC: Executive Office of the President, 1990).14. See the Commission on Environmental Cooperation, Taking Stock

2000: North American Pollutant Releases and Transfers (Montreal, Canada:Commission on Environmental Cooperation, 2003).

15. See J. E. Post and B. W. Altman, “Models of Corporate Greening:How Corporate Social Policy and Organizational Learning Inform Leading-Edge Environmental Management,” in Research in Corporate Social Perform-ance and Policy 13, ed. J. E. Post, 3–29 (Greenwich, CT: JAI Press, 1992).

16. See S. L. Hart, “A Natural-Resource-Based View of the Firm,” Academy

of Management Review 20 (1995):986–1041.17. This study is found in J. Aragon-Correa, “Strategic Proactivity and

Firm Approach to the Natural Environment,” Academy of Management

Journal 41 (1998):556–567.18. See V. P. Rindova and J. J. Kennelly, “Transfer of Environmental

Standards in the Global Chemical and Pharmaceutical Industries: ALearning Perspective,” in Proceedings of the Sixth Annual Conference of the

International Association for Business and Society (1995), ed. D. Nigh andD. Collins, 575–580.

19. P. Ransom and D. J. Lober, “Why Do Firms Set EnvironmentalPerformance Goals? Some Evidence from Organization Theory,” Business

Strategy and the Environment 8 (1999):1–13.20. Logsdon and Wood, “Implementing Global Business Citizenship.”21. Information on commitments by large firms to sustainable develop-

ment can be found in S. Schmidheiny, Changing Course: A Global Business

Perspective on Business and the Environment (Cambridge, MA: MIT Press,1992); World Business Council on Sustainable Development, Sustainable

Development Reporting: Striking the Balance (Geneva, Switzerland: WorldBusiness Council for Sustainable Development, 2002).

22. Basic scientific principles underlying the first three system condi-tions of The Natural Step are the first and second laws of thermodynamicsand the law of conservation of matter. See B. Nattrass and M. Altomare, The

Natural Step for Business: Wealth, Ecology and the Evolutionary Corporation

(Gabriola Island, B.C., Canada: New Society Publishers, 1999); H. Bradburyand J. Clair, “Promoting Sustainable Organizations with Sweden’s NaturalStep,” Academy of Management Executive 13 (1999):63–73.

23. Nattrass and Altomare, “The Natural Step for Business,” 111. Informa-tion about Interface taken from this source.


24. Data from British Petroleum, including text from the booklet “WhatWe Stand For,” is available at www.bp.com, accessed 4/15/03.

25. Data and quotes from Ford Motor Company are found in Ford’sreport, Connecting with Society: Our Learning Journey (2002).

26. For an overview of the global warming issue and how some companiesare dealing with it, see S. Labatt and R. White, Environmental Finance: A

Guide to Environmental Risk Assessment and Financial Products (Hoboken,NJ: John Wiley & Sons, 2002).

27. See Ibid.; and S. W. Percy, “Environmental Sustainability and Cor-porate Strategy: Why a Firm’s ‘Chief Environmental Officer’ Should Be ItsCEO,” Corporate Environmental Strategy 7 (2000):194–202.

28. This pledge is reported in Jeffrey Ball, “Ford, Breaking Ranks withRivals, Plans to Boost Fuel Economy of its SUV Fleet,” Wall Street Journal,7/27/00, p. A2.

29. See www.unglobalcompact.org. Text of the Rio Declaration can befound at United Nations General Assembly, Report of the United Nations

Conference on Environment and Development: Annex I (New York: UnitedNations, 1992).

30. For example, see D. Lober, D. Bynum, E. Campbell, and M.Jacques, “The 100 Plus Corporate Environmental Report Study: A Surveyof an Evolving Environmental Management Tool,” Business Strategy and

the Environment 6 (1997):57–73; KPMG, KPMG International Survey of

Corporate Sustainability Reporting 2002 (Amsterdam: KPMG GlobalSustainability Services, 2002).

31. See Global Reporting Initiative, Sustainability Reporting Guidelines

(Amsterdam: Global Reporting Initiatives, 2002).

Documents

Global Business Citizenship