Substantive Corporate Sustainability versus Symbolic Corporate Sustainability


 
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Substantive Corporate Sustainability versus Symbolic Corporate Sustainability
Anneke Zwart, Student (University), Netherlands

Due to increased awareness that people nowadays have about environmental issues, many companies have started sustainability programs.
- Truly realizing such sustainability campaigns is called taking “substantive sustainability action”. Managers are for example taught to use the code of ethics in daily business/ using renewable energy/ using solar power/ pursue other sustainability goals.
- However, it seems to be true that a large share of these companies mostly talk about such sustainability programs while at the same time not realizing these programs. Indeed most companies nowadays follow a “symbolic sustainability action” strategy, which means that companies publicly report that they intent to do something while not taking action. In this way, the external audience will believe that those companies are taking action. A sense and perception of action is thus generated, although the company does not actually modify its activities and businesses.

It was then examined whether types of sustainability action are different or the same in its impact on business performance. It was found that the efficiency of both sustainability actions depend on the degree of already established sustainability resources.
1. If the level of intangible sustainability resources (such as a good reputation) is high, symbolic sustainability action is more advantageous than substantive sustainability action. It is effective because it confirms and further strengthens already existing expectations concerning sustainability.
2. If the environmental capabilities of an organization are low and the sustainability is relatively new to the organization, taking substaintive sustainability action is more effective than taking symbolic sustainability action. Assuming decreasing marginal returns, the marginal returns of taking substantive sustainability is higher if the company starts with a low level of environmental capabilities. For the same reasons, the marginal returns of taking substantive sustainability action is relatively lower if the environmental capabilities are relatively high.
3. The most efficient way is to act upon your announcements, take both symbolic and substantive sustainability action. It is effective because it minimizes issues with credibility, scrutiny and accountability. Besides, the market value will be maximized, since markets will reward both the promises made and the realization of those promises.

Source: Ioannou, I (2013) “Pretty Green” Business Strategy Review Vol. 25 Iss. 1 pp. 74-75
 

 
 

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