Global Business Citizenship

Business and Society Review 109:1 67– 87

Global Business Citizenship: Applications to Environmental Issues

LOGSDON Blackwell Oxford, Business BASR © 0045-3609 0 1 109 2004 Original BUSINESS 00 2004 Center UK Articles and Publishing AND Society forSOCIETY Business Ltd Review REVIEW Ethics at Bentley College

JEANNE M. LOGSDON

. . . benefiting as it does from the collective exploitation of ecosystem services and non-renewable resources on an enormous scale, the international corporate sector will ultimately need to recognise the essentiality of sustainability as a concept, even for the continued viability of its own corporate activities. This sector should be expected, in time, to develop measures which go beyond the basic requirements of environmental and human rights law and to adopt, individually or collectively, standards of practice which lead the way in the quest to achieve true sustainability. Santillo and Johnston, 19991 Businesses can create environmental problems for society in virtually all facets of their operations. While government regulations and minimum environmental standards are necessary to reduce negative environmental externalities, the need and desire for voluntary business initiatives to improve environmental quality continue to grow. Firms engage in voluntary environmental improvements for a variety of reasons, including management’s values, concerns about firm reputation, and cost reduction. The challenge for managers of global corporations today is to find the optimal level of environmental performance that takes into account environmental realities,

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

© 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.

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fundamental ethical principles, and stakeholder needs in addition to economic costs and benefits and legal requirements. As indicated in the opening quote, addressing this challenge is increasingly important and consistent with the long-term self-interest of business organizations. Global Business Citizenship (GBC) has been proposed as a comprehensive theoretical framework for guiding managers in making responsible decisions wherever they operate.2 This article will explore how to apply GBC to the important area of environmental performance. After briefly reviewing the GBC framework, I will examine some of the central ideas about environmental performance and how progressive companies have begun to incorporate environmental sustainability into their operations. The GBC model provides a framework for understanding these examples. Along the way, various challenges will be identified and suggestions made for how to deal with them.

GLOBAL BUSINESS CITIZENSHIP Global Business Citizenship is a set of policies and practices that allow a business organization to abide by a limited number of universal ethical standards (called hypernorms), to respect local cultural variations that are consistent with hypernorms, to experiment with ways to reconcile local practice with hypernorms when these are not consistent, and then to implement systematic learning processes for the benefit of the organization, local stakeholders, and the larger global community.3 This definition may sound like the traditional concepts of corporate social responsibility and corporate social responsiveness, and indeed it has much in common with these traditional concepts. What is different? GBC was developed in the late 1990s to distinguish the social responsibility and responsiveness concepts from corporate citizenship, which was the term increasingly being used to connote a variety of good corporate social practices.4 Conceptual confusion was apparent about whether corporate citizenship was the same as or different from social responsibility and responsiveness. The term “corporate social responsibility” had evolved during the 1960s to the 1980s to encompass four categories of responsibilities: economic, legal, ethical, and philanthropic.5 This more sophisticated view of

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social responsibility succeeded in putting to rest the old debate about “economic vs. social.” The “social responsiveness” term entered the lexicon in the 1970s to focus attention on processes of implementation within large firms.6 The term “corporate citizenship” had a history in both scholarship and business usage of meaning corporate community relations, which included good-neighbor activities such as philanthropic contributions.7 Thus, it seemed too limited to encompass the increasing agenda of corporate social responsibility on the global scale. But it was clear that “corporate citizenship” had attracted much positive business attention in the 1990s.8 What was not clear was whether these executives were understanding the term to mean the broad, values-based social responsibility concept or a community-relations focus, which could extricate them from taking on greater responsibilities for the impacts of their decisions and activities. At the same time, we (Kim Davenport, Patsy Lewellyn, Donna Wood, and I) became intrigued with the concept of “citizenship” as a guide to what business organizations as citizens might be responsible for. However, we quickly discovered that citizenship is not a simple and straightforward concept that has the same meaning for everyone. In fact, it has been subject to many interpretations over the centuries as cultures, societies, and nations have evolved. At the present time, there are different understandings and preferences about what a human citizen is and should be, depending upon political ideology and other factors. We found Parry’s distinctions between minimalist, communitarian, and universal rights perspectives particularly useful.9 The business organization as citizen can also be viewed according to these three perspectives. It is clear to us that the minimalist view characterizes neo-classical economics and agency theory, and a narrow view of corporate citizenship as focused on good community relations is representative of communitarianbased citizenship. But the more comprehensive view of firms operating everywhere according to principles of social responsibility and ethics needs a term that is unambiguous, and we have identified “global business citizenship” as that term. GBC has both normative and instrumental dimensions. Normative arguments underscore the critical importance of ethical analysis and decision-making. Instrumental arguments explain the “business case” for GBC as consistent with, and even necessary for, an organization’s economic success.10

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FIGURE 1 The Global Business Citizenship Process Model

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

THE GBC PROCESS A general process model to specify the steps in operationalizing the GBC concept has been developed and is presented in Figure 1: Step 1—Code of Conduct/Corporate Policies. To be a good business citizen, a company must identify its basic values and how to implement them. A company’s basic values may be found in a company credo or a mission statement, but these documents may not reflect completely the company’s ethical standards. By formulating a code of ethical conduct that reflects sound and widely accepted

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ethical principles (hypernorms), the company can more easily provide specific guidance for situations that organizational members will typically encounter. Hypernorms are fundamental common principles that are found in virtually every contemporary culture, major religion, and statements agreed upon by nations to guide human behavior, such as “killing innocent persons is wrong.”11 Codes of conduct vary in orientation, format, and scope. In some organizations the code of conduct is a statement of basic ethical principles with no applications; in other organizations, it is a set of rules that serves as an operational guide to behavior but without grounding in fundamental principles. It is important that both the underlying ethical principles and how they are applied be apparent to users of the code. A useful code of conduct will cover normal business functions and operations (e.g., safety practices; purchasing) and will deal with situations that are specific to the firm or its industry (e.g., hazardous chemical use in semiconductor chip manufacturing). It is also crucial that manuals of standard operating procedures or organizational routines reflect what is in the code of ethical conduct. Top management must be clear and consistent about how it perceives the organization’s responsibilities and duties to stakeholders in all company documents if it expects the organization to act as a good business citizen. Step 2—Implementation. Managers are typically expected to implement the global code of ethical conduct in all the various locations where a company does business. Presumably and ideally, in most cases there will not be significant conflicts or gaps between the guidelines of the code and local customs, cultural norms, or national standards because the company’s values, code of conduct, and corporate policies have been well designed. However, operating managers have to be conscientious in making judgments. They must be aware of the problems that may arise by arbitrarily applying the company code in cases where customs or local standards are in conflict. Or, there may be unintended consequences from implementing the company code that will create problems for stakeholders or ethical dilemmas for the company that were simply not addressed or foreseen in the code itself. Engaging in stakeholder dialogue and being open to feedback about code implementation are important sources of information to responsible managers about whether the company’s actions are effective and

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acceptable. If problems surface, managers should be prepared to move to Step 3. Step 3—Problem Analysis and Experimentation. Cases in which company codes of ethical conduct cannot easily be applied require the analysis and experimentation of Step 3. These cases may include situations where unintended negative consequences become apparent or where local custom diverges substantially from the company code, and where local managers need to analyze whether these differences should be resolved in favor of the code or not. It is especially useful in this analysis to have an in-depth understanding of the hypernorms underlying the company code. It may be that managers can find through experimentation a reasonable way to incorporate local customs and still be consistent with company standards. In other cases, the manager may resolve conflict by supporting the company’s code and will need to communicate clearly and respectfully to locals the reasons why this decision has been made. Explanations that draw upon underlying hypernorms can be helpful here. Or, the local manager may need to communicate to headquarters about why a company policy should not be applied and some alternative action is better in this case. Hypernorms can also be helpful in articulating these reasons. Step 4—Organizational Learning is the essential last step in GBC implementation. Local implementation (Step 2) as well as problemsolving and experimentation (Step 3) will best serve society and the organization’s purposes when the firm institutes feedback loops and learns systematically from all its experiences. Systematic learning involves grasping the structural and normative similarities and differences among the various situations the transnational corporation encounters in its many locations, extracting the essence of these experiences, and providing models or exemplars of what works and what doesn’t work in terms of adapting and experimenting with hypernorm implementation. It also involves altering the guidelines of the code itself when it becomes apparent that certain aspects 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 and must deal with contradictory demands and expectations with some

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type of “satisficing” approach. Another challenge is that stakeholders themselves are not necessarily consistent in their judgments, needs, and desires. Looking for guidance from stakeholders creates its own problems when different stakeholder groups disagree. Timing and time frame also make a difference. An action that meets immediate goals may have significant long-term negative consequences. Uncertainty about the nature of consequences also contributes to the challenge of acting as a good business citizen. Social-psychological biases may also influence judgments about what is fair and who should benefit.12 Nevertheless, managers must make decisions every day that require thoughtful understanding of what the company expects, what stakeholders expect, and what is the ethically appropriate course of action. The GBC framework is intended to help managers at various levels in the organization sort out the issues and systematically move through a process to make the optimal decision, and then to help organizations learn from managerial experience.

BUSINESS AND THE NATURAL ENVIRONMENT Environmental sustainability is the ongoing challenge to ensure that current and future generations will have adequate natural resources to survive and thrive. Such resources include sufficient supplies of clean air, clean water, habitat for human and wildlife, and minerals and other physical materials necessary for life on earth. Until the mid 1900s, there did not appear to be many environmental limitations on business growth, but over the past half century scientific evidence of environmental degradation and the contributions of business activity to the decline in environmental quality has become indisputable. In every industrialized nation a complex regulatory regime establishes environmental standards and rules for sources of pollution. Compliance with these rules has yielded much progress for control of the regulated pollutants. For example, between 1970 and 1987 annual lead emissions in the U.S. declined 96% (from 203.8 million to 8.1 million tons).13 More recently, the amount of toxic chemical releases from the NAFTA countries (Canada, Mexico, and the U.S.) declined by 5% between 1995 and 2000, a period of significant economic growth.14 But the state of the natural environment continues to concern many people

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because of intractable local issues (such as sufficient availability of 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 global warming). As the creators of economic activity, firms are often the sources of environmental problems, and they can also be affected negatively by declines in environmental quality. Some organizations have made good environmental performance a priority, expecting to exceed legal requirements by a large margin. These progressive organizations have evolved in their strategic orientation about the natural environment. Post and Altman identified a general developmental model of corporate “greening” in which organizations moved through three phases. The first is an adjustment phase during which the organization makes changes in its current environmental processes on an ad hoc basis in reaction to changing legal and market requirements. The second is adaptation to incorporate environmental goals and policies beyond minimum requirements to accommodate growing environmental awareness. The third phase is innovation to become fully proactive in institutionalizing environmental management in all business decisions.15 Their developmental model is reflected in Hart’s description of the three specific approaches that firms have demonstrated in dealing with environmental issues—that is, a focus on pollution prevention in the 1970s, to the product stewardship approach in the 1980s, and then to sustainable development beginning in the 1990s. According to Hart, these orientations are cumulative in that product stewardship requires effective pollution prevention, and sustainable development incorporates pollution prevention and product stewardship in addition to its higher level of environmental commitment.16 Empirical research has confirmed that firms that are strategically proactive are also advanced in incorporating better and more comprehensive environmental activities into their operations.17 What factors account for evolving approaches and patterns to deal with environmental issues? Post and Altman stressed the learning component in this evolution. Hart (1995) focused on strategic competitive advantage as driving enlightened concern about the natural environment. Rindova and Kennelly identified both learning and legitimation as critical factors.18 Ransom and Lober examined possible theoretical explanations for setting voluntary environmental

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goals and found that firms were responding to stakeholder pressures and institutional factors in joining an EPA initiative to voluntarily reduce toxic emissions.19 Logsdon and Wood examine motivations along both normative and instrumental dimensions at the organizational, personal, and systemic levels.20 The GBC process encompasses all of these factors in guiding managers to adapt and innovate in their continuing efforts to contribute to environmental sustainability for both normative and instrumental reasons. Here is how the GBC process can be applied to environmental issues, along with examples of good environmental performance. Code of Conduct/Corporate Policies In applying the GBC model to environmental issues facing an organization, the first questions that organizational leaders need to ask are: where can we find hypernorms that relate to our environmental responsibilities, and what are they? One important source of environmental hypernorms is the United Nations, specifically the Declaration of the United Nations Conference on the Human Environment, adopted in 1972, and the Rio Declaration on Environment and Development, adopted in 1992. Table 1 contains a number of principles from the Rio Declaration that might be considered as fundamental environmental values by top management. As an example of selecting a hypernorm, the organization’s leaders may accept as a guiding hypernorm the Rio Declaration’s concept of sustainable development “so as to equitably meet developmental and environmental needs of present and future generations” (Rio Declaration Principle 3). In fact, top executives in a number of large organizations have committed their organizations to support this ambitious goal.21 But how does the organization move from this very general goal to more specific guidelines for business practice? There are a number of paths available, and one that is becoming widely known in the business world is The Natural Step, which was designed in Sweden in the late 1980s through the efforts of Dr. KarlHenrik Robèrt. The Natural Step is based upon the ethical principle that destruction of the future capacity of the planet to support life is wrong. The Earth’s capacity to support life is dependent upon four system conditions that have been affirmed by scientists as indisputably accurate and essential in order to achieve ecological sustainability:22

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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

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

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2) Substances produced by society must not systematically increase in the ecosphere. (For example, “unnatural” substances such as plastic must not be produced at a faster rate than they can be broken down and re-integrated into nature. We should pay much closer attention to waste disposal. Convert waste to inputs for other productive activities as much as possible.) 3) The physical basis for productivity and diversity of nature must not be systematically diminished. (For example, destruction of habitat often reduces species diversity. Over-fishing the seas also violates this condition of sustainability.) 4) If we want life to continue, we must have fair and efficient use of resources to meet human needs. Promoting justice will avert destruction of resources. (For example, immediate survival needs drive much destruction of the rainforests. Excessive consumption in the industrialized nations is not fair to future generations.) A few proactive firms have begun to embrace these high standards in ways that fit their operations, many of them in Sweden and other Western European countries (e.g., IKEA, Electrolux, Scandic Hotels). A U.S. exemplar that has received much favorable publicity for its commitment to The Natural Step is Interface, the commercial carpet manufacturer and distributor. Interface’s chief executive Roy Anderson championed the effort to articulate a very ambitious goal —that Interface would be the first truly sustainable company in the world, defining “sustainable” as meaning “taking nothing from the Earth and doing nothing harmful to the Earth.”23 Anderson inspired his company to take the lead in striving to transform itself and its products by means of waste-free and pollution-free processes. The next question is how to incorporate top management’s self-chosen basic environmental principles and values into the company’s operations. The method of doing so is highly contingent upon the nature of the organization. Some firms create codes of ethical conduct; others focus on sets of rules to cover specific functional areas (such as operations manuals, purchasing guidelines, etc.). It is crucial that the organization’s leaders examine typical situations where the hypernorm is relevant, just as they would do risk management or issues management reviews. For example, Royal Dutch Shell and other energy companies extract and transport petroleum, natural gas, coal, etc., from the earth and process these

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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.

raw materials into commercial products, which in turn must be distributed and sold to end users. Their activities may jeopardize human health and local ecological stability along the many steps in the process from exploration through retail sales. Their codes of conduct, operations codes, or whatever format they use to communicate management principles need to explicitly affirm the general principle of the Rio Declaration and indicate clearly how it should be applied in company operations worldwide. An example of a company code that has evolved in recent years because of stakeholder pressures and thoughtful top management review is British Petroleum’s Commitment to Health, Safety and Environmental Performance, one of its five basic business policies. The current statement is found in Table 2. The statement is written in clear language and is unequivocal in its support for “no accidents, no harm to people, and no damage to the environment.” BP indicates

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on its website that its health, safety, and environment expectations are known to all employees and expected of all employees. Its management system includes thirteen elements of accountability against which managers are evaluated.24 Implementation The next step shifts attention to local-area managers who receive the general guidelines from headquarters and are expected to implement them in an effective and efficient manner. The local manager has many responsibilities, only one of which is protection from environmental degradation. It may be that many decisions that relate to the environment are straightforward ones because equipment and processes have already been adapted to conform to the company’s guidelines. That is, processes are institutionalized into organizational routines that reflect good environmental stewardship. However, the manager must reflect carefully in situations involving values conflict, uncertainty, and inconsistencies among competing goals. For example, there may be uncertainty about cause and effect. What should be done if a change in production seems to occur at the same time that many fish begin to die in the river or lake near the plant? Many managers in companies that do not support GBC or a hypernorm about environmental protection might ignore this coincidence, at least until external pressures (such as the media or a regulatory agency) become formidable enough to require action. The manager in a GBC company is likely to consider the possibility that the plant’s operations may be the cause and begin to investigate why the fish are dying. A good example of how a company’s values support sustainable development involves Ford Motor Company’s design of environmental controls in its new plant in the state of Bahia in Brazil. One of Ford’s principles of environmental management is “transition to sustainability and eco-effectiveness”25 (p. 52), and it has identified a number of steps throughout the company that it is taking to make this transition. The Complexo Industrial Ford Nordeste (Ford Northeast Industrial Complex) is located near Camacari, a city in Bahia, on land where topsoil and vegetation had been removed. Ford has planted native vegetation on 7 million meters of land on and adjacent to the plant site. It collects rainwater into three new lakes designed to control runoff and also to provide habitat for wildlife. To

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control sanitary wastewater and other sewage, it is designing a system of wetlands constructed with soil, rice, water lilies, and cattails to purify water sufficiently to use in the facility’s gardens. This plant received the Social Value Award in the environmental category by a Brazilian business newspaper. All of these activities denote effective implementation consistent with Ford’s environmental principles. Problem Analysis and Experimentation Implementation may often be relatively straightforward, but what happens when it is not? This is the arena of Step 3 in the GBC process where problems must be analyzed and various alternative solutions tried until the problem is suitably resolved. There are many types of problems that may occur. For example, a local manager may realize that following the company’s code is going to be much more expensive in his location because of environmental conditions or it will cause serious negative consequences within the local community. Or, market and technological changes are presenting the organization with opportunities to provide more environmental performance to the customer than in the past, but how much more is reasonable and feasible? Another type of implementation problem involves uncertainty about an enormous potential environmental problem that the company cannot solve alone, but collective action is unlikely until far in the future. How should the company proceed? How can it contribute? When managers realize that application of the company code will create undesirable consequences for stakeholders, they need to consider those consequences carefully. For example, a company may have set an ambitious environmental goal of reducing solid waste by 50% worldwide within 5 years. This goal may be desirable and attainable with positive consequences in most locales where the company has facilities. But one facility in a very poor community is an exception—in that community the very poor elderly population get 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 and cooking. Waste disposal has a social welfare dimension that is not significant elsewhere. What should this manager do? An example of the second type of implementation issue involves Interface, the commercial carpet maker. Interface’s big transformation

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in the mid-1990s to The Natural Step was triggered in part by a large potential customer requesting recyclable carpet. Recycling carpet raises many technical issues because it is traditionally petroleum-based, rather than being made of natural fibers, and processed with dyes and other substances to reduce wear-and-tear. Depending upon usage and wear patterns, carpeting has to be replaced frequently in high-use areas, such as hotel lobbies and parts of major office complexes. Frequent replacement is great for the manufacturer, but results in a great deal of waste that gets tossed into landfills. Looking for an innovative solution that was compatible with The Natural Step, Interface pioneered the concept of “leasing” carpeting (the “Evergreen Lease”) in which the customer gets attractive carpeting with regular replacement in high-use areas, and Interface gets annual lease payments that cover the cost of replacing sections that are worn or damaged. But what to do with those worn sections of carpet? Through a number of pilot projects, Interface has reduced the amount of toxic dyes and other chemicals in the carpeting so that it can be more easily recycled. It is also finding ways to cut waste in its own manufacturing processes with the goal of having a closed-loop system—that is, the outputs from one industrial process become inputs for another process. Another type of problem that is more challenging occurs when the marketplace and public policy have not accepted the changes necessary to deal with a serious environmental issue. A company may be ready to respond and even lead, but its customers are not ready to accept what the company believes is required. Global warming represents such a problem. It is a particularly difficult issue to deal with because of scientific uncertainty about longterm climate processes and the global, yet localized, nature of its projected impacts (changing temperatures, amounts of rainfall, sea levels, etc.). Collective-action qualities of the problem require participation by all parties to a century-long (at least) abatement strategy to reduce greenhouse gases (especially carbon dioxide from use of fossil fuels). Many ways to reduce these gases threaten the immediate interests of powerful companies and nations.26 All these reasons make it easier for a company to ignore and then resist calls to cut carbon emissions from its facilities and products than to do its part to deal with global warming, and this is what most large firms did in the 1980s to mid-1990s while scientific data were being gathered about the greenhouse phenomenon. Even today most

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firms are failing to act. But a few leading companies have recognized the potential for great harm and are trying to figure out how to lead when most of their customers are reluctant to change their buying habits and preferences. Companies in the energy and transportation sectors are particularly affected by the global warming problem. British Petroleum was the first energy company to publicly acknowledge the potential for significant climate change in a speech by its chief executive John Browne at Stanford University in May 1997. He indicated that the private sector needed to become involved in dealing with potential climate change, and that BP intended to respond.27 The company needed a baseline study to find out its greenhouse-gas emissions before it could set goals for their reduction. It conducted an emissions audit and then established the first intra-company carbon trading system with independent verification of reductions by auditing firm Ernst and Young. BP’s goal to reduce greenhouse-gas emissions by 10% by 2010 was achieved in 2002. The company’s long-term product strategy is to shift to natural gas and then to renewables for its energy products. Automaker Ford joined BP in publicly acknowledging global warming as the most serious environmental problem facing the company and its industry in 1999, but it continues to face a significant problem in terms of its product line vis-à-vis its customers, especially those in the U.S., where gasoline prices have been relatively lower than in most of the rest of the world. Through R&D projects, Ford has been developing a number of technologies to make its vehicles more fuel-efficient and thus reduce greenhouse gas emissions, e.g., through greater efficiencies in current engines and through innovation to design fuel cell, hydrogen internal combustion, hybrid, and battery-powered electric vehicles. It also pledged in 2000 to improve average fuel economy of its SUV fleet by 25% over the next five years.28 However, it wondered publicly in 2002 whether “consumers, especially in North America, [are] truly interested in and willing to pay for new technology” (p. 9). Ford’s sales of SUVs and light trucks have grown significantly relative to its more fuel-efficient vehicles. This is good for Ford’s profitability because 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 experiments to reduce greenhouse gas emissions, but its progress in

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terms of average fuel economy is modest at best. One wonders if Ford 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 headquarters on their efforts to operationalize the company’s environmental values and code of conduct, including the specific nature of business, social, and environmental conditions, problems encountered, attempts (experiments) to overcome them, and results. Systematic analysis and comparison of typical and unique cases will yield valuable insights on how best to handle certain kinds of implementation issues. The company will understand more clearly under what conditions it can implement specific technological, political, and management process solutions. Systematic communication will also feed back into environmental goal-setting and perhaps even the principles and language in the code of conduct. Learning should be communicated both inside and outside the organization. To protect its competitive advantage, the firm’s leaders may want to limit disclosure of the organization’s environmental performance to insiders. However, this policy may preclude attainment of extraordinary benefits to stakeholders that could be accrued by communicating its environmental successes—and failures—outside the firm. Several international organizations are providing venues for sharing environmental information. For example, SustainAbility, a UK think tank and consulting group, collects case studies on various sustainability and business success factors and makes them available on a sophisticated website, www.sustainability.com. The United Nations, through its Global Compact project, also invites submission of cases about experience with Global Compact criteria, which include protection of the natural environment. It operates a Learning Forum to share knowledge about successful practices among businesses as well as to increase transparency with stakeholders.29 Another approach to learning and communicating with stakeholders is by providing information about environmental performance in comprehensive sustainability reports. This is fast becoming the norm among large global firms.30 Criteria for reporting have been designed with inputs from stakeholders as well as from executives

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

SUMMARY AND CONCLUSIONS Global Business Citizenship asks executives to be more comprehensive and expansive in considering their business responsibilities as citizens of the planet. These responsibilities include accountability for the impacts of their product and process decisions on the natural environment and everyone dependent upon the natural environment. Environmental impacts are of grave concern today in large part because of growing production and consumption. Many optimistic observers believe that we will reach a crucial point in the 21st century where populations in developing nations will be able to attain the high levels of consumption that we in the industrialized world enjoy today. Environmental pessimists fear that this drive will tax the Earth beyond its capacity to provide the resources for production and distribution and to absorb the waste and pollution of 9 billion consumers. Business executives will be given a large responsibility for providing economic development that is also sustainable, especially in developing countries. Their voluntary environmental initiatives are needed to supplement generally weak governmental regulations and poor environmental infrastructure. Global Business Citizenship is intended to nurture these voluntary activities that are based upon fundamental ethical principles and stakeholder needs and that ultimately will benefit the corporate enterprise itself.

NOTES 1. See D. Santillo and P. Johnston, “Ethical Standards and Principles of Sustainability,” in Human Rights Standards and the Responsibility of Transnational 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

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to Organizations,” in Ethics and Entrepreneurship: The Ruffin Series 3, ed. R. E. Freeman and S. Venkatraman, 59 – 94 (Charlottesville, VA: Society for Business Ethics, 2002); J. M. Logsdon and D. J. Wood, “Business Citizenship: 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,” in International Corporate Responsibility: Exploring the Issues, ed. J. Hooker and P. Madsen (Pittsburgh, PA: Carnegie Mellon University Press, forthcoming). 4. See this argument developed in D. J. Wood and J. M. Logsdon, “Theorising 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 Corporate Social Performance,” Academy of Management Review 4 (1979):497 – 505. 6. For the early history of the conceptual development of social responsibility and social responsiveness, see W. Frederick, “From CSR1 to CSR2: 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 Institutional Roles: The Evolution of Corporate Philanthropy, 1883 –1953,” Business & 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 Environmentally Benign 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).

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13. Available U.S. data on lead emissions and other types of pollutants for the 1970s and 1980s can be found in the report of the U.S. Council on Environmental 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 LeadingEdge Environmental Management,” in Research in Corporate Social Performance 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: A Learning Perspective,” in Proceedings of the Sixth Annual Conference of the International Association for Business and Society (1995), ed. D. Nigh and D. Collins, 575 – 580. 19. P. Ransom and D. J. Lober, “Why Do Firms Set Environmental Performance 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 development 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: World Business Council for Sustainable Development, 2002). 22. Basic scientific principles underlying the first three system conditions of The Natural Step are the first and second laws of thermodynamics and 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. Bradbury and J. Clair, “Promoting Sustainable Organizations with Sweden’s Natural Step,” Academy of Management Executive 13 (1999):63–73. 23. Nattrass and Altomare, “The Natural Step for Business,” 111. Information about Interface taken from this source.

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24. Data from British Petroleum, including text from the booklet “What We Stand For,” is available at www.bp.com, accessed 4/15/03. 25. Data and quotes from Ford Motor Company are found in Ford’s report, Connecting with Society: Our Learning Journey (2002). 26. For an overview of the global warming issue and how some companies are 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 Corporate Strategy: Why a Firm’s ‘Chief Environmental Officer’ Should Be Its CEO,” Corporate Environmental Strategy 7 (2000):194–202. 28. This pledge is reported in Jeffrey Ball, “Ford, Breaking Ranks with Rivals, 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 be found at United Nations General Assembly, Report of the United Nations Conference on Environment and Development: Annex I (New York: United Nations, 1992). 30. For example, see D. Lober, D. Bynum, E. Campbell, and M. Jacques, “ The 100 Plus Corporate Environmental Report Study: A Survey of 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 Global Sustainability Services, 2002). 31. See Global Reporting Initiative, Sustainability Reporting Guidelines (Amsterdam: Global Reporting Initiatives, 2002).