THIRD EDITION
EDS.
TOMMY BORGLUND
SUSANNE SWEET
CSR
AND SUSTAINABLE BUSINESS
THIRD EDITION EDS. TOMMY BORGLUND
SUSANNE SWEET
SANOMA UTBILDNING
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CSR and sustainable business
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Part 1 – Companies, responsibility and sustainability 11
1. Corporate responsibility in a changeable world 13
Introduction 14
Influential global trends 14
Geopolitics and democracy 14
Democratic value chains 15
Regulation and transformation 16
The company’s responsibility and role in society 17
The various stakeholders of the enterprise 17
The stakeholder model 18
Shareholder value 20
Licence to operate 22
Trust 26
The definition of trust 27
CSR in a global business environment 28
Corporate responsibility in a historical light: the case of Sweden 29
The iron works 29
The industry 34
Post-industrial Sweden 37
Responsibility and sustainability in context – the structure and contents of the book 39
The structure of the book 40
2. Corporate social responsibility renegotiated 45
Matters that get people involved 46
A disputed area with a long history 48
Interacting stakeholders 52
Issues of responsibility in news reporting 55
Rules, standards and codes of conduct 59
Case: Merino wool in Swedish clothing companies 60
Case: Planting trees – an easy way to take responsibility? 62
Agendas and public opinion 68
Companies as societal parties 72
3. Sustainability and business 75
Increasing resource usage 76
Sustainability and CSR 79
Sustainability and sustainable development 79
International collaboration to protect the environment 82
Sustainable development − the definition that won out 83
The environmental work of the UN and global agreements 84
The sustainable development goals, Agenda 2030 85
Associated terms and definitions 87
Sustainability and economic growth 89
Companies and sustainability 92
Sustainable business 92
Understanding and measuring the company’s environmental impact 93
The environment as a competitive advantage – and an aspect of corporate responsibility 95
Sustainability as a strategic vision 96
Value-generating
sustainability efforts 100
Including social and environmental values 102
Case: Cradle-to-cradle 104
4. Business and Social Sustainability 107
Business and its multiple connections to social sustainability 108
What is Social Sustainability? 108
Influential Human Right Conventions,
Directives, and Laws 110
Human Rights and the Sustainable Development Goals 112
Human rights, international migration, and work 115
What is Migration? 116
The Categorization of Migrants and its Impact on Work 119
Free movement migration 119
Work and labour market category of entrance 120
Humanitarian, accompanying family, and family reunification categories of entry 122
Modern slavery and labour market exploitation 125
Migration and business in intersection 127
Integration 127
Discrimination in society and at work 129
Organizational programmes for the inclusion of immigrants 133
Case: IKEA’s global Skill for Employment programme 134
Looking to the future 136
Part 2 – In practice 139
5. Sustainable production, purchasing, and circular economy 141
Sustainable consumption and production in a globalised world 142
Sustainability and responsibility in the value chain 147
Companies’ sustainability management of the value chain 148
Norms and rules for managing and controlling corporate responsibility in the value chain 153
Sustainable purchasing and supplier responsibilities 156
Tools for a sustainable supply chain 159
Case: A proactive and structured way of working with sustainable purchasing 162
The circular economy 166
Case: Shifting to a sustainable, circular business model 175
6. Sustainable consumption, marketing and consumers 179
Responsibility and the consumer society 180
Marketing to consumers 181
Consumer protection 182
Demands on responsibility in the consumer society 184
The consumer’s role and responsibilities 185
Consumers and consumption 185
Consumers as activists 187
Consumer behaviour and purchasing choices 190
Companies and the consumer 192
Adapting the business model for the climate 193
Product labels and certificates as a strategy 195
Case: Digital tools for supporting sustainable consumption 197
From labelling to branding 203
Future marketing: a focus on the product and value creation 204
The circular economy – designing sustainable products 205
The sharing economy – person to person and the gig economy 205
Nudging and attempts to change behaviours 207
7. Ethics and sustain ability control in organisations 211
The ethical perspective 212
The nature and focus of ethics 212
Descriptive ethics 212
Normative ethics 213
Values and norms 213
Ethical decision-making 215
The focus of normative theories 217
Levels of ethics 219
Ethics in practice: Corruption 220
A problem at several levels 223
Anti-corruption efforts in organisations 225
The responsibility of the individual 227
Controlling people in an organisation 229
Rule-based governance 230
Value-based governance 232
Different kinds of values 234
Roles and structures in the organisation 235
The matter of autonomy and integrity 239
Two different viewpoints 240
Case: Operation Smile 242
An alternative understanding: Professional ethics 243
The context of control 244
The goals of control 246
The matter of education 249
What can we learn from this discussion? 249
8. Sustainability reporting 253
Background 254
Being held accountable through reporting 256
Standardisation of sustainability reporting 257
The green deal 260
GRI Standards 260
Management approach and topic-specific disclosures 262
International regulations 264
EU regulations on non-financial information 265
A national example: Sweden 266
Beyond reporting 267
Part 3 – Governance and strategy 271
9. Sustainable investment 273
Responsibility and sustainability in the financial market 274
Stakeholder value and shareholder value 276
Institutional investors and retail investors 278
Responsible and sustainable investment – what is it? 279
Common methods for sustainable investment in listed shares 281
Case: Impacting a company’s climate efforts through corporate governance: The surprise board of Exxon Mobil 287
Sustainable investment in bonds 289
Sustainable investments – other asset types and investment areas 292
Sustainability in loans 294
A growing market 295
Financial returns – are sustainable investments doing better or worse? 298
Sustainable investments as a force for change 300
Influencing through divestment 301
Influencing through dialogues and voting 303
Investors want transparency and comparability 304
Pension funds 307
Sustainable investments and the future 310
Case: The influence of investors: The meat producer JBS 312
10. Strategy and sustainability 315
Strategies under development 316
Creating a strategy 317
Stakeholder and materiality analysis 319
Practical guidance 321
Strategic thought models 322
CSR as “Shared Value” 323
Three ways to create “Shared Value” 324
Case: “Shared Value” as a strategy 330
From charity to innovation 331
Base of the Pyramid 332
Social entrepreneurs 333
Sustainability strategies – from “trade-off” to “win-win” 338
11. Strategic communication 341
Changing communication channels 342
Increased requirements on communication 344
Explosion of CSR communication 345
Toward an increase in regulation 347
Communication with an impact 347
Communicating with integrity 349
The fear of the media 352
The responsibility of the media 354
Effects on responsibilities 355
Strategic branding work through CSR 356
A warning on distrust 357
Building a reputation through communication 361
authors
preface
The third edition of the book CSR and Sustainable Business has been produced during a time of geopolitical conflicts and shifts in trade policies, which have strongly affected companies in terms of access to and distribution of various resources and input goods, but also political changes in terms of the direction and requirements on companies’ accountability and sustainability efforts. During this time, the EU has developed a number of directives under the umbrella of the EU Green Deal. The European Commission is now proposing that this be revised and simplified under the name Omnibus. Further, the UN and scientists are reporting that we will have difficulty achieving the climate goals in the Paris Agreement, that biodiversity is declining rapidly and that this decline may be a systemic threat, that conflicts continue to create refugee crises, and that the work to achieve equality has ground to a halt. However, the transformation toward more sustainable business models continues with full force in areas such as renewable energy, fossil-free steel, electrical vehicles, and "slow fashion". For many companies, sustainability is a financial value driver and a given part of the business strategy.
It is with greater uncertainty regarding the direction of the sustainability work of the world and its companies that we write this edition. However, we also want to inspire hope: companies and organisations have previously taken on the leadership role in finding solutions to the many challenges that we as a society face. We believe that this book can serve as a continued support for that work.
The book introduces many of the perspectives that make up CSR and sustainability and can be seen as an introduction to the field, showing its breadth and internal connections. It can be used as a teaching aid at the university and college level and will also be useful for anyone who wants to familiarise themselves with the issues. The authors who have contributed come from several different institutes of higher learning and have extensive experience of academic research and teaching on the topic. Some do hands-on work in the field for the private sector.
The third edition has been revised compared with previous editions, where chapters 1, 4, 5, and 7 have been heavily rewritten, whereas the remaining chapters have been updated and partly rewritten. We have reduced the number of chapters but partially integrated contents into the remaining chapters to cover important areas such as ethics and corruption. The chapters are grouped into three different themes,
ranging from general and conceptual chapters to more specific, topicfocused ones.
The authors of the various chapters are presented in greater detail at the end of the book. We are proud of the line-up and grateful that everyone has willingly made their expertise, writing skills, and time available for the book project. Thank you to all the authors, to all the advisors who in other ways contributed to the contents of the book, to all the company representatives who took the time to contribute with their experiences from the CSR area, and to all others who in various ways shaped our ideas and reasoning! Foremost among them, we thank Sanoma Utbildning for this third edition, with the publisher Karin Sörensen and the publishing editor Helén Park wholeheartedly supporting the book project, and the production team at eddy.se, who encouraged us in the process and raised the text and images to new levels.
We hope you will find the book interesting and instructive!
We would also like to pay tribute and dedicate this edition to our friend and former co-author Hans De Geer, who passed away in 2021.
Tommy Borglund and Susanne Sweet stockholm july 2025
Chapter 1 – Corporate responsibility in a changeable world
Chapter 2 – Corporate social responsibility renegotiated
Chapter 3 – Sustainability and business
Chapter 4 – Business and Social Sustainability
Corporate responsibility in a changeable world
Tommy Borglund & Susanne Sweet
this introductory chapter starts with a reflection on how geopolitical events have changed the conditions for corporate activities and sustainability efforts since the previous edition of the book. Then, the role of companies in society is discussed at a general level, as well as, more specifically, how corporate responsibility has been shaped within the framework of the stakeholder perspective and the Nordic welfare model. The chapter ends with an overview of the book’s structure and contents.
Introduction
Since the previous edition of the book, global political developments have greatly impacted the conditions for nations, companies and human beings. We will initially account for three areas that we see as strong trends which may come to impact companies’ sustainability efforts in the future: geopolitics, democracy matters and regulation. Then, we contextualize this by describing ideas regarding corporate responsibility and concepts related to current views of the role and responsibilities of a company, primarily by describing the stakeholder perspective. Lastly, we describe how business activities and responsibilities have developed in Sweden from a historical perspective.
The chapter concludes with an overview of the contents of the other chapters that make up the book.
Influential global trends
Geopolitics and democracy
Since the previous edition of the book, geopolitical conflicts and democracy issues have become among the most crucial matters to deal with in business and society. Russia’s invasion of Ukraine has changed many things, including for businesses. Democracy is now a more crucial matter on the agenda for sustainability managers and as an issue to handle within the framework of corporate sustainability strategies. This includes which types of countries a company should operate in and if they can have suppliers and clients there. If a company, despite grave risks, chooses to operate in a dictatorship, how should it act and what should it do to promote democracy? For instance, companies reacted very strongly to Russia’s invasion of Ukraine with powerful protests for democracy, free markets and human rights. Companies also made donations and gave support to Ukrainian refugees and refrained from doing business with Russia or ceased with their operations there. Thus, boycotting dictatorships returned as a tool in the corporate toolbox. This was more common in the early days of corporate social responsibility, for instance against the apartheid regime in South Africa.
Companies are not the only entities participating in boycotts of countries, companies and their products – citizens and consumers have also protested against European companies that have done business with or had operations in dictatorships. New terms like sportswashing
(Bergkvist & Skeiseid, 2024) have appeared to cast light on the problem of countries like Saudi Arabia investing in large global sports events and buying sports clubs in Europe in order to counteract criticism of the regime’s crimes against human rights.
Other important geopolitical conflicts that have greatly influenced both global distribution of goods and raised questions about humans rights and responsibilities during war include the conflict in Gaza. The Danish shipping company Maersk chose to redirect its regular shipping routes through the Suez Canal and the Red Sea, going around the Cape of Good Hope at the southern tip of Africa instead, extending transportation distances by 25 percent and tripling the cost of transports (Transport&Logistik.se, 2024). Another geopolitical conflict is the ongoing trade war initiated by the US president Trump, which has created concern worldwide, with falling stock prices and great uncertainty regarding the consequences on businesses and global stability.
Democratic value chains
As an effect, businesses have started highlighting geopolitical risks more. Increasing numbers of companies are planning to move their value chains back home from countries that risk becoming dictatorships or that have other large risks, to make local purchases instead. This is referred to as ‘derisking’ of value chains. Countries that are often mentioned in this context include Russia, Iran, Myanmar and North Korea, as well as China. Companies face large investments in finding new suppliers that can replace Chinese manufacturers, for instance. It takes time to shift a value chain that has taken many years to build. Efforts to promote democracy, risk analyses and business to support democracies will probably be a new and important sustainability matter for companies in the future.
It seems as if markets and societies together defend our planet. When democracy is threatened, companies and markets act to protect it. And democracies advocate for and expand free markets. An example from the time of writing is Donald Trump’s return to the White House as president of the USA. During the first one hundred days, he introduced a number of initiatives that were dubious from both a democracy and a market perspective, including tariffs on trade from other countries. The reaction was dramatically falling stock prices, rising interest rates in the US and a drop in the value of the American dollar. Perhaps, the interconnected global world of financial markets, product markets,
and labour markets is the best guarantor against unfreedom, ignorance and radicalisation. From that perspective, companies have never had a more important role in society.
Regulation and transformation
Another aspect that has moved forward drastically since the previous edition is regulation of sustainability matters. Society has, through its politicians, reacted to reticence on the part of companies in addressing major sustainability challenges, in particular the climate. What was formerly resolved through self-regulation has become subject to regulation. The EU has introduced a programme to make the EU the world’s most competitive region through sustainability. It is the EU ‘Green Deal’, where the directive on sustainability reporting, the Corporate Sustainability Reporting Directive, CSRD, is the flagship. A large number of companies in Europe are forced to report on their sustainability work in a more advanced and transparent manner. This is expected to have effects on companies’ strategies. In synergy with new regulations related to the financial market (primarily the Sustainable Finance Disclosure Regulation, SFDR), these are intended to serve as a force for adaption and transformation into a sustainable and competitive Europe.
A number of large industry sectors are already working on this, as an effect of the regulation and the new expectations from society, but also because it is a natural and profitable part of new business ventures. Jakobsson and coauthors (2025) indicate that the sectors for steel, energy, vehicles, construction and forestry are ones in which large changes are taking place. The transformation means both that the companies offer new products that make their clients more sustainable and that they themselves do things in a more sustainable way. Two processes at the centre of the transformation are the climate and circularity (for more on circularity, see Chapter 5). This relates to companies that are lowering their own climate impact and that of their clients, as well as companies that can use resources multiple times in their own operations or through their clients and suppliers.
But first, let us introduce this further by looking back on past discussions regarding the role of companies in society and the never-ending dialogue between a company and its stakeholders.
The company’s responsibility and role in society
Corporate Social Responsibility (CSR) means the company’s responsibility in society, but historically there have been different ideas about what it entails, which is why one can say that the meaning of the concept is constantly being renegotiated (see Chapter 2). The question has also been raised as to whether a company can be considered responsible, since the organization often consists of many individuals and decision-makers.
From a responsibility perspective, markets and organisations differ. A market can hardly be a moral entity, although the media – in particular – far too often describe markets as entities. The market cannot be held responsible; responsibility falls on the entities that organise the market or act on it. However, companies can be considered to be moral entities, even if some theoreticians claim that only people can make moral decisions. However, one prerequisite is that the company must have a clear organisation that is relatively stable over time (see, e.g., French, 2005).
Another question that arises is what a company’s responsibility should encompass and in relation to what or whom? In this book, we adopt a modern view of corporate responsibility, based on a stakeholder perspective. In the next section and in chapter 2, we will describe what a stakeholder is, various stakeholder models and how companies work to build confidence among their stakeholders.
The various stakeholders of the enterprise
Most companies begin as entrepreneurial projects, where the dividing line between the entrepreneur’s personal liability and finances and the development of the enterprise is unclear. The pioneer lives with, for and in his or her enterprise. Many enterprises remain small and led by their owners, in every practical sense. Others develop into mid-sized and large companies, hire employees and, eventually, executives and
chapter 1 – corporate responsibility in a changeable world 17
mid-level managers. The organisation grows and becomes a type of bureaucracy. The perspectives of the company and the owner diverge − if not before, then at generational shifts, as the heirs might not have the same level of commitment. At such times, if not before, the question arises if the owners’ or the company’s interests should take priority. What is the goal and purpose of the company?
This is, at its heart, an ideological question and has no obvious “scientific” answer. In more recent debates, two primary views can be distinguished in the matter of which interests are fundamental or primary: the owners’ ( shareholder value) or those of other affected parties ( stakeholder value; for a discussion of these concepts, see Borglund, 2006).
The stakeholder model
The latter view is based on the idea that all companies are surrounded by a number of stakeholders (stakeholder value). A stakeholder is defined as a party either affected by operations or that has a possibility to influence them in some way. The stakeholder concept thus pertains to power and vulnerability. From a strategic perspective, the powerful stakeholders usually warrant more attention from management.
From an ethical perspective, the most vulnerable are foremost. The American expression “stakeholder” also includes a risk aspect: whoever has most “at stake” in a context (the expression comes from horse betting) is taking the largest risk. Stakeholder models can be designed around all human endeavours, not just companies. As regards the latter, the typical stakeholders (aside from owners) are clients or customers, suppliers and investors. Employees, if there are any, are obvious stakeholders; sometimes they are called primary stakeholders, while the others are called secondary stakeholders. Society at large, the local environment and future generations are also ranked among the stakeholders, even though they are not really “parties.” The American professor Edward R. Freeman is considered to be the person who introduced the stakeholder model into discussions on corporate social responsibility. This was in the 1980s, but similar ideas can be found in the works of the Swedish economist Eric Rehnman in the 1960s (Freeman, 1984; Stymne, 1995).
Stakeholder models are often drawn as in Figure 1.1. The operations (the company) are at the centre, with identified stakeholders surrounding it.
18 part 1 – companies, responsibility and sustainability
EMPLOYEES
CLIENTS
INVESTORS
SUPPLIERS
THE COMPANY
SHAREHOLDERS
THE MEDIA
THE PUBLIC
COMPETITORS
Figure 1.1 Classic stakeholder model: the groups identified as stakeholders may vary
Arrows and their directions reveal the type of relationship with each stakeholder, with the most important ones highlighted. In recent years, it has become more common to portray stakeholder relations as a spider web, still with the operations (the subject) in the middle, and spokes pointing radially outwards. The difference is, as seen in Figure 1.2, that the relationships portrayed include not only those between the stakeholders and the party in the centre, but also those between the stakeholders, which can be important to identify.
THE
COMPANY
chapter 1 – corporate responsibility in a changeable world 19
Figure 1.2 Spider web stakeholder model.
Shareholder value
The concept of shareholder value has a different focus. Among the stakeholders, owners are seen as a special group, with interests that should take top priority: the operations of the company serve primarily to increase the value of the capital owners’ investments. There is a historical logic to this line of reasoning. Most companies begin through some form of owner initiative and risk. An entrepreneur invests his or her resources in a business concept, without being guaranteed success. The returns on the ventured owner capital cannot be guaranteed, unlike the investments made by other parties, whose share in returns are usually regulated through contracts or agreements: lenders, employees, suppliers etc. The higher risk is compensated through greater influence on the operations. Considerations of the owners’ interests should therefore take priority over other interests. The owners also have the right to the company’s residual.
In small or family-owned companies, the owners may have many different goals. In larger, listed corporations, the owners’ interests must be defined in a narrower, but also more general, way. Shareholder value is one such general interpretation of what different groups of owners might want to achieve with their investment: seeing their fortune increase, in the long or short term, regardless of what has been sacrificed to achieve this goal.
“The business of business is business” is an expression for this streamlining of the complex web of motivations behind a company. The message has a powerful simplicity and what the man behind it − the Noble Laureate Milton Friedman − meant was to highlight the task given to the employees in an executive team by the company’s owners: to increase the value of their investments. Social or environmental considerations, beyond those regulated by law, should not be taken into account by the operative managers. Nor do they have the right to use the company’s resources to support various not-for-profit goals. Of course, the capital owners could use their resources freely for such purposes, which they in many cases were expected to do in the American society (Friedman, 1970).
Following in Friedman’s footsteps, his successors in the so-called Chicago school of economics – Friedman was a professor at the University of Chicago – formulated an ideologically slanted message regarding the role of companies in modern society. It contained a strong rejection of everything that, with time, would come to be referred to
as CSR: the role of the company was to increase the value of invested capital and the task of management was to procure such value for the owners (Borglund, 2006).
Alongside this fundamental, ideological critique of the idea of CSR, a more practice based critique has also been formulated, for instance by Dave Henderson, the former chief economist of the OECD. He pointed out that companies normally do not have the competence for various social or environmental projects. On the other hand, there are often specialised and highly effective organisations in the public sector or the international community focused on such tasks. Henderson suggested that it was a sub-optimal resource usage to have various companies take on CSR commitments (Henderson, 2001).
Toward the end of his life, Milton Friedman modified his strict rejection of CSR and admitted that companies should show certain forms of environmental and social responsibility in order to fulfil their tasks in the long term. Michael Jensen, one of Friedman’s successors at the University of Chicago, started referring to this modified stance as enlightened shareholder value. This concept offered space for environmental responsibility, social responsibility, good working conditions and proactive efforts against corruption, in order for companies to reinforce their ability to deliver value to their owners in the long term. The risk of having operations referred to as environmentally dangerous, insensitive to inhumane working conditions or corrupt had grown too large. For this very reason, more and more companies find it strategically important to be proactive about matters encompassed by the concept CSR, i.e., sometimes taking greater responsibility than what is explicit from regulations.
Another step in linking the strictly economic aspects with the broader social aspects can be seen in Michael Porter’s and Mark Kramer’s ideas on “Shared Value”. Porter, a professor at Harvard, who became famous for, inter alia, theories on the role of corporate clusters in economic development, has been very critical of the CSR concept but changed foot in an article from 2011 which garnered a lot of attention. On the back of the criticism against capitalism and lacking responsibility on the part of the industry, following the economic crisis of 2008, he and his co-author Kramer stated that a short-term and one-sided focus on profit need not be the norm. The success of companies can be united with positive social development. Goods and markets can be seen from new perspectives, productivity can be defined in new ways
and companies can find new methods of working jointly toward goals that meet crucial needs among several important stakeholders. This change in the views on how shareholder value is created is based on a shift in the bulk of entrepreneurial endeavours, from production to distribution and marketing. Shareholder value is increasingly based on intellectual property, on the reputation a company has and the ideas that consumers connect to a company’s processes and products. Especially in sectors and fields where product development has achieved such maturity that the difference between different companies’ product ranges is negligible, it is increasingly important to associate the products with other values. Taking responsibility in CSR matters becomes important: environmentally friendly products, production processes that do not harm those involved, honest business methods, etc., become assets in the creation of a strong brand: reputation management is an area that is attracting more and more interest, both academically and in practice (see further Chapter 5, 6 and 11).
Henderson’s (2011) critique should, however, be taken seriously. This can be done by developing CSR commitments along two lines of action, which can be combined. One entails that companies should develop their CSR commitments as an extension of their own operations and based on their own competence. This would mean that a telecom company does other things to take responsibility than a forestry company and that a consumer-oriented retail chain finds other areas to focus on than a producer of raw industrial materials. The other line of action, which has become increasingly common to achieve intelligent CSR, is creating an alliance between the company and a volunteer organisation. This does not have to entail sponsorship or a simple exchange of resources against legitimacy − rather, this is a long-term, mutual learning process.
Licence to operate
The efforts of companies to meet the expectations on social and environmental responsibility have, over the past few years, increased quite a bit, both internationally as well as in the Nordics. Almost all larger companies mention such matters in their annual reports, in special sustainability reports, in integrated reports and on their websites. What is clear is that the question is no longer if a listed company should take on CSR responsibility, but how . Merely polishing the surface may serve to
22 part 1 – companies, responsibility and sustainability
increase the risks: CSR commitments are to be seen as promises to the world and cannot be neglected without risking your reputation (read more about sustainability reporting in Chapter 8 and sustainability communication in Chapter 11).
Individual companies do not decide independently what responsibility they are expected to take. Various industry collaborations and memberships in industry organisations play a part. It is easier to take on responsibility if it is “competition-neutral,” i.e., if all the competitors make similar promises.
Through political decisions, there is defined regulation in the form of legal acts at a national level and overall guidelines at an international level (see the definition of soft regulation, below). Many companies refer to such regulations when their CSR commitments are mentioned: “We obey the law.” Since time immemorial, the political system has set the boundaries for economic ventures: they have been strictly regulated and companies have adapted − or they have been relatively liberal, with companies adapting accordingly. Flexibility is a virtue in running a company. But today, it is not enough for companies to do what the law and other regulations require. There are other stakeholder groups who want to have a say, including an increasingly powerful category of transnational, institutional investors. They have, since the deregulation of the financial markets in the 1980s, using increasingly fast technology, expressed their preferences through purchases, sales and various forms of c orporate governance (CG). Corporate management teams spend more and more time in a dialogue with investors at the financial centre of the world (see also Chapter 9).
A fourth group in the debate about what companies are expected to do, in addition to the companies’ own representatives, politicians and financial players, are the new interest organisations, often called NGOs (Non-Governmental Organisations). As already mentioned, collaborations between large companies and NGOs have become very common; many large companies announce on their website that they are collaborating with some NGO.
NGO (NON-GOVERNMENTAL ORGANISATION)
NGOs are also called Civil Society Organisations. There are millions of NGOs globally, UN alone work with over 1 500 NGOs, which operate in many countries and usually focus on one or a few issues. They may be broad membership organisations or more activist-influenced groups. Amnesty and Greenpeace are two examples. This field also includes volunteer organisations of a more general type, like the Red Cross and Save the Children. They lift their issues in relation to other groups of stakeholders or the powers that be, in a collaborative or confrontational way, depending on the circumstances.
In the communication with these stakeholder groups, an arena for discourse has been created, where ideas regarding what companies should do take form. The media make up one part of this discussion, acting as both arena and player. The follow-up of companies’ commitments through the media is a prerequisite if companies are to go from words to action. The discussion on this arena is characterised by the different possibilities for alliances and attitudes toward other groups. The discussion can become a closed debate between elite groups, but can also provide space for a broader, more democratic debate.
Figure 1.3 A company must live up to the expectations of its surroundings in order to gain legitimacy. In this way, the company gains its “licence to operate.”
24 part 1 – companies, responsibility and sustainability
As an individual citizen, you can influence companies both in the capacity of employee and that of consumer. It is possible to express preferences as regards CSR through your choice of goods and services, or in your choice of employer. Employer branding is highly based on a company making its views on responsibilities known. As a citizen, the individual can vote for the party that expresses reasonable expectations on companies. You can join an NGO and invest your savings with a trustee that requires its portfolio companies to match its own views. The overall view of all the stakeholders, taken as a whole, shapes the expectations that companies must live up to in order to gain legitimacy. This legitimacy constitutes a licence to operate. This does not relate to the various formal permits from authorities, but to having the world accept a company’s actions in different aspects. There are, however, a number of initiatives aimed at determining the conditions for a licence to operate in the form of different types of norms. These are what is known as soft regulation: their nature is that of regulations, but they are neither law nor ordinance − they are simply norms or guidelines. Such guidelines on companies’ actions exist at both a general level and a more detailed, industry-specific level, with both national and international frameworks. The most important general points of reference for CSR are OECD’s guidelines for multi-national companies, ICC’s Principles for Business in Society and the conventions that form the basis for the UN Global Compact, i.e., the UN’s declarations on Human Rights and Corruption, the ILO’s Fundamental Conventions on Labour Law, and the Rio Declaration on the environment. The same should be said about the seventeen global Sustainable Development Goals that the UN adopted in 2016 up until the year 2030. These are to be seen as prioritised, but fairly roughly defined areas of policy, in which various societal players are expected to contribute to a desired development. These norms have, to various extent, been implemented in national laws here and there, but taken overall, they have the formal position of “soft rules.” However, they are “hard” enough that they almost take on the role of international law. The contents of the different documents are, in many aspects, similar, but the creators and “owners” of the guidelines, as well as the target groups, differ. At an industry and sub-industry level, the governing documents are more specific and take on the role of international contracts between companies in the industry.
Trust
A licence to operate is a vote of confidence from the surroundings. The question of trust or reliability has been debated within social sciences over the past decades, following initiatives on the part of researchers like Francis Fukuyama and Robert Putnam. The latter, in particular, played an important role in coining the phrases high trust- and low trust-societies.
Putnam (2000; 2002) discusses a type of overall trust as a characteristic of or an asset within a society. In societies where citizens trust their surroundings and the institutions that keep societal order, there is a high level of general trust. The Nordic countries are seen as such societies. Certain transactions that can easily be performed there would not be possible in other places. A high level of general trust lowers transaction costs and thus streamlines the economy in general. When it comes to building confidence, the private sector is struggling with a legacy of distrust, which has been underlined by classical economic theory and conceptions of rational decision-making. It is not easy for companies to convince the outside world of their good intentions when the goal of their operations is expressed as returns on investment or, simply put, financial gain. Western culture is permeated by scepticism against the idea that financial operations can be united with good citizenship. This view has been based on – or used by – both the church and radical political ideologies over the years: anyone who is ruled by money or represents rule by money has lost their credibility as a citizen.
What can a company do to improve its legitimacy and trustworthiness? The question has been posed time and again following recurrent industrial and financial crises during the past decades, when both large and small savers have lost fortunes, while those in leading positions in banks and companies get larger and larger compensations. The crisis in the early 2000s led to reinforced legislation in the USA (Sarbanes-Oxley Act). In Sweden, the so-called Corporate Code of Governance was adopted, to achieve greater transparency and clearer rules for listed corporations. The large financial crisis (2008–2009) led to a tightening of regulations, both in the EU and elsewhere, but the confidence of the public in the players on the financial markets has not improved. The financial crisis in the wake of the corona pandemic in 2020 has once again brought to the fore the debate on if companies can receive state support and subsidies while paying out the usual dividends to their
shareholders and handsomely remunerating their managers. In connection with the bankruptcy of the battery manufacturer Northvolt in March 2025, it became clear that the company’s managers had sold their shares before the poor finances of the company were discovered, while several Swedish pension funds lost SEK 6 billion due to their investments in Northvolt.
“The willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.” (Mayer, Davis and Schoorman, 1995)
The definition of trust
So, what is confidence or trust? Following the collapse of the apartheid regime in South Africa, a commission on confidence was instated, to bridge the antagonism in society. The commission asked a number of philosophers for a definition of the concept trust and a suggestion on how societal trust could be increased.
Trust is, according to their definition, the confidence that a party in power will wield this power in a way that is beneficial to the other party, even though there is no way to control the first party’s actions. Accepting such a position of dependency is to show trust. I cannot monitor what my pension trustee does with my savings − beyond possibly checking after the fact − but I still deposit a sum with them monthly. That is trust. I do not actually know what is in the jar of baby food, even if there is a list of ingredients on the label, but I feed my child with the contents anyway. That is trust. I settle into the airplane seat, secure in the knowledge that someone else has performed all the necessary checks. I surrender my life into the hands of the airline and its staff. That is trust.
The definition of trust says that trust arises irrespective of the ability to monitor or control. Still, trust and control are linked. You can see the trust of the world as a type of capital needed to operate certain businesses. The more various stakeholders can control and follow-up, the less this will eat away at the trust capital.
FOUR WAYS TO GAIN TRUST
Create possibilities for control
Increase openness and transparency of relevant information.
Know-how
Prove yourself as competent, up-to-date and experienced.
Reinforce the integrity of the organisation
Adhere to rules and regulations and avoid corruption
Show benevolence
Create long-term relationships to everyone’s satisfaction. Do not take advantage of others.
CSR in a global business environment
Ideas about CSR have, as already mentioned, sprung out of an increasingly global business environment. Still, local or national experiences will characterise the expectations that each company is faced with. How can these differences be managed? Should companies adapt to local expectations or should they stick to a single course of action, wherever they do business? The reasoning regarding this connects to the theoretical difference between absolute and relative values.
One key term in the justification behind the introduction of the UN Global Compact in the late 1990s was embeddedness. This line of thought was brought forward by John Ruggie, a professor at Harvard and advisor to former UN Secretary-General Kofi Annan in these matters. The degree of embeddedness affects the expectations on a company taking on responsibility. A company that is or claims to be global will naturally get more responsibility than one that mainly operates and sees itself as local. A company can also choose between a shallower or a deeper commitment to the societies in which it operates.
What moral right does a company from one country have to assert the rules of its home country when doing business elsewhere? The influential American business ethicists Thomas Donaldson and Thomas W. Dunfee have tried to deal with this problem through a combination of faith in absolute rules and recognition of local variations. They suggest that there are number of so-called hyper-norms that anyone, both a company and an individual, has reason to adhere to. They can
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be defined in a relatively tangible way through internationally recognised conventions, for instance regarding human rights, labour law or environmental concerns. These conventions are not binding for a company unless they have been implemented in national regulations. Making an active choice and taking a stance in relation to various conventions is one way to take on the CSR challenge. There is, however, a risk that the ambition is seen as supercilious, big-brotherly, moralistic or imperialistic (Donaldson & Dunfee, 1999).
What is not affected by such general norms is open for shifting local practices; Donaldson and Dunfee call it moral free space. Here, you must recognise that the conditions vary − customs and values shift and flexibility is needed. Naturally, this requires moral competence and an understanding of where the limits are and under what circumstances local customs come in conflict with general norms. For instance, matters relating to child labour can be very hard to deal with in practice. Moral responsibility can sometimes be a cover for protectionism. Many representatives of operations in poorer countries find it hard to accept that their companies are barred from international trade because of circumstances that characterised the Western industry earlier in its development.
Corporate responsibility in a historical light: the case of Sweden
Opinions on the social responsibility of enterprises have existed as long as there have been enterprises. They have changed with each new epoch. The following section sheds some light on the different phases of the view on the societal role of enterprises in Sweden − as well as various solutions to the problem of responsibility (De Geer, 2009).
The iron works
The Swedish iron works have become a model for a way of organising complex operations, which has gone well beyond the heyday of the works themselves. Iron works started emerging in the 1500s and expanded during the 1600s and 1700s, but were exposed to strong forces of change during the 1800s, resulting in the disappearance of many
of them. The death of the works led to a significant structural transformation, a concentration into larger units that were run in a more modern, industrial fashion.
During the time when the works flourished, the economic policy in most European countries closely resembled a type of planned economy. The watchword of the day was mercantilism. The national economy was largely closed off and permits were required for both export and import. Even within the country, regulations were strict on who could do what and where. The concept of the nation as divided into four estates – noblemen, priests, burghers and farmers – reflected their different roles in the economy. The owners of the iron works, however, did not fall neatly into any of the four estates. They could be commoners, but still people of rank. They were sometimes richer than noblemen and landed at their works. They could be as well-read as priests, but lived provincially, like farmers.
The mobility on the job market was, in this era, quite low. People stayed in their towns or districts. There was a form of duty to work; anyone who did not have a permit for his own operations or a landed estate had to apply to work for some kind of master. A person who did not have a master could be used in forced labour. The works were usually the dominating operations in their region. It was common to be born and die serving the works. The affinity was very strong − which was a mixed blessing: this meant safety in some aspects and lack of freedom in others.
The owner of the works led a conglomerate and had to master many things in order to lead the operations. The works often encompassed structures for several stages of iron processing. A furnace, which produced pig iron, could be combined with a hammer, which processed pig iron into malleable bar iron, and a smithy that created various types of iron items. Different kinds of skilled workers were also tied to the iron works. The highest ranking were usually the smiths, who played a significant role in final quality.
Iron production required several different raw materials, mainly iron ore and charcoal. The owner not only had to know about iron manufacturing − he also had to be familiar with forestry. The need for fuel required extensive forests, through which charcoal could be created. With time, the demand for wood became the main problem in production and efficient use of raw materials became a crucial success factor for iron works. The works were usually associated with large
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farms and animal husbandry. Plantations must be maintained to feed both people and animals. Here, farmers and milkmaids were needed, as well as people to perform sowing and reaping and everything else that comes with a large country household.
chapter 1 – corporate responsibility in a changeable world 31
Lövsta bruk in Uppland, Sweden. The buildings are typical for the works environment, where worker housing, church and workplaces together form a small town.
The owner of the works has a responsibility as master to the people in his service. Ideologically, this responsibility had religious roots. This entailed not only wages and leadership, but also significant social responsibility throughout the lives of the people at his works. From the early years through to the weakness of age, people had to be supported, even when they could not contribute with anything in particular. There was often some form of school or teacher at the works. Education could be a springboard out into the world for especially gifted youths and was also a way to sift out who could be entrusted with the more complex tasks at the works.
Of course, the responsibility as master was exercised in a patriarchal way. The staff of the works was seen as part of an extended family. Relationships within the family could be referred to as “broad.” This means that they covered many aspects − both personal and professional. People at the works knew one another over many generations. The head of the household’s right to use family members where and as he saw fit was largely unlimited. With time, many came to feel this was offensive. Environmental responsibility was not a common concept at the works. There was reason to exercise husbandry of the land, water and forests belonging to the works, so they could be used by future generations. However, knowledge of sustainable farming and forestry was sadly lacking, although many owners of works studied new findings in this area with great interest, when they began to spread from the new academies in Stockholm during the 1700s. Deforesting remained a problem. Pollution of air and water was, however, a problem for the future.
Patriarchal leadership was also common within early industrial enterprises in the 1700s. They were often located in the growing urban centres, like Stockholm, Göteborg and Norrköping, and manufactured items such as iron goods, textiles, tobacco or chemical products. Here, the local insularity was not as large as at the works, although workers at each factory often lived close to it, in houses owned by the factory owner. There was a kind of affinity here too. Even within farming, the work order was patriarchal. A system of agricultural labourers (in Swedish: statare), largely being paid in kind, arose at larger farms in southern Sweden. There, the patriarchal elements remained for longest. This system was not abolished until 1945.
The shift from craftsmanship to industrial production meant that the need for Workforce in the cities grew dramatically. Image from
1910–1920).
Bolinders Mechanical Works in Stockholm (circa
The industry
The transition to an industrial society was gradual and long, encompassing the period from the mid-1800s to the mid-1900s. Soon after 1900, more people in Sweden earned a living from industrial work than from agriculture. In the mid-1930s, more than half of Sweden’s citizens earned a living working for the industry. Development of communications, steamboat traffic, railways and roads, as well as the telegraph and the phone, created new conditions and new markets. New energy systems were created. The mobility of the population increased dramatically and many moved from the countryside into cities. As a next phase, many moved on to other countries, primarily the USA. The old works ended up on the wrong side of development, losing their business in the increasing competition, losing their workforce and losing independence to expanding wholesalers working on the export markets.
An important condition for the industrial development was the increased liberalism of the economic policies. This included trade both inside and outside the country, a more generous right of establishment for entrepreneurs and the rise of a functional capital market with savings banks, corporate banks and securities exchanges.
The Swedish industry gained speed especially through the sawmills, first in the western regions, and then along the coast of the northern region. The strong economic growth in England was the driving force, creating demand for construction materials. One generation later, sawmills were supplemented with pulp factories and paper mills. The chemical industry developed through match factories and factories for manufacturing explosives and fertiliser. The increased usage of machines in agriculture, on rails and at sea created a demand for metal works. Urbanisation stimulated the construction industry and construction materials industry. At the end of the 1800s, several industrial companies were founded to exploit new technical inventions. These were the foundations for large, export-oriented and internationally renowned companies like the Nobel Industries, Separator, SKF, AGA, ASEA, LM Ericsson and Atlas Diesel, which in turn led to the growth of a network of subcontractors. Aside from the later car manufacturers, the Swedish industry structure was largely established already during the first decades of the 1900s.
The transition from crafts to industrial production entailed increasingly mechanised work and using other energy sources than human and
animal. Technology changed the relationship between the human and his or her tools. The construction of machines became vital − setting the pace of production and determining the level of human interaction needed to keep the system running. The human’s ability was reduced to one aspect of many in the production process.
Technology was based less on manual skill and more on scientific research. It was then a small step to considering the idea that the optimal human role in production was also governed by scientific rules, which could be researched and applied. This was at the heart of the management and organisational systems, such as the American Frederick W. Taylor’s scientific management and the Frenchman Henri Fayol’s theory of business administration, which started to gain prominence around 1900. Where they were implemented, they contributed to clearing away the remains of older forms of corporate management, which could be seen as irrational, emotional or un-economic. Large parts of the patriarchal sense of responsibility were also phased out.
The forms of enterprises changed. More and more enterprises became limited liability companies. In such companies, owners had limited liability and only risked the investment they had made to acquire their shares. The company acted as its own legal person.
Industrialisation in Sweden occurred in rural areas first. Gradually, the city became the typical environment for industrial manufacturing, either by locating manufacturing to cities or by the creation of towns close to industrial companies. In cities, growing numbers of people in search of work gathered and the supply of workforce was generally good. However, the living conditions for the uneducated and their families were terrible, as a rule. Many people were day labourers. Industrialisation led to a proletariat forming within the urban, uneducated workforce. For members of the skilled workforce, industrialisation created new developmental opportunities. They could build a platform out of their competence, through which they could negotiate the price for their work.
Concurrent with industrialisation, unionisation grew, inspired by the development in Great Britain. It began among skilled workers and reached non-qualified workers later. During the 1880s and 1890s, many unions were formed. They, in turn, joined into industry and professional organisations. In order to manage the joint interest of the unions, which were mainly political, Landsorganisationen (LO) was formed in 1898. For salaried employees, unionisation occurred much later − and the academics’ unions sprang up later yet. As a response to
the unionisation, companies banded together into employer organisations. The Swedish Employers’ Association (SAF) was founded 1902. Thus, there was a basic structure in place for gradually developing the forms for negotiations regarding production, compensation and workplace conditions. The government contributed with regulations, but allowed the parties to negotiate the contents of their contracts. This was one of the fundaments of the Swedish model, made internationally famous in the 1930s by the book of the American journalist Marquis Childs: Sweden the Middle Way. The other fundament was a division of responsibility between the industry and the public sector, shaped in a negotiation between the social democrats and the liberal parties: the industry would not be nationalised but based on corporate rationality not taking socio-economic considerations into account. A strong public sector would, in turn, take care of both the social conditions that working life was based on (e.g., education) and the transitional phenomena that a changeable industry entailed (such as employment agencies and jobseeker’s allowances), as well as the situations when citizens could not be part of the workforce (due to illness or old age).
Thus, the basic idea was that private industry would produce goods and services, while the politically governed public sector would deal with social matters. This meant that the private companies were excused from broader social responsibility, aside from what was part of the production process (such as worker protection and work environment matters). The most important social task of the companies was to be profitable and create jobs. Companies that showed an ambition to take broader social responsibility were not welcome on the social arena. The unions strived to remove all the remains of patriarchal responsibilities: compensation in kind, of any type, was to be replaced by remuneration in money.
It was a conscious aim to make the relationships between employers and employees as “thin” as possible: a certain work effort was to be exchanged for a fixed economic compensation. The relationship was to be business-like and rational. Thus, the goals of unions and corporate management met in a minimisation of the human relationships within working life: the work force became a purely economic function and social matters were not something for companies to deal with. However, Swedish companies generated jobs and economic growth at an unprecedented pace during the decades following the Second World War.
Post-industrial Sweden
The Swedish model was national. Not in the sense that it was unique or outstanding − rather it was a Swedish version of a model used fairly generally in northern Europe. It was national in the sense that it, in order to succeed, required a possibility of regulating the relationship with the foreign economy. The model of the job market required regulated immigration. The negotiating system on the job market, which as a rule resulted in overly large wage increases, was based on the possibility of regulating cost levels in relation to foreign countries through devaluations.
During the 1980s, the Swedish model began to crack because of international developments. During the 1990s, large parts of it disappeared because of globalisation. Sweden entering the European Union in 1995 also changed the playing field and it was not clear how the adaptation to the freedom of movement would be carried out. Globalisation can be defined in several different ways. One definition is that the significance of geographic location decreases within the economy. Other parameters are, for instance, costs, access to workforce, infrastructural conditions and institutional frameworks becoming more important in finding the right location. As more and more countries started working together on increasingly open markets, the economic map of the world had to be altered.
Another important condition was the deregulation and internationalisation of the financial markets. Foreign exchange controls were abolished in many places. The international flow of capital grew in size and strength. The effects of this were obvious in Sweden, where more and more of the largest companies became partly or fully foreign-owned through mergers or acquisitions: AGA, ASEA, Astra, Avesta, Bofors, Saab, Stora, and Volvo, to name but a few. Others, which are still seen as Swedish companies − such as Ericsson − have a very large foreign element among the shareholders.
Another change related to the interface between what private companies could do and what was reserved for the public sector. Many fields, where government, counties or municipalities had formerly held a monopoly, were now open to private initiatives: private schools, healthcare centres, hospitals, job centres, etc. The list is quite long. Even public organisations that were not privatised were reorganised to become more like private companies. Such changes were referred to as “New Public Management” or NPM. The very core operations
of the public sector, the exercise of authority, were influenced by the concepts regarding efficiency shaped by private companies. The boundary between the private and the public became vague when they were so similar in form. This made it harder to retain the idea that social responsibility was only applicable to the public sector. As a political reaction to this development there is a debate, which sometimes still flares up, regarding the justness of having private companies in the tax-financed welfare sector giving large dividends to their owners.
Production became more computerised and knowledge-intense in many sectors. This meant an increased dependence on research and development. Such resources are hard to build up within a national framework. To get access to them, you need larger units or collaborations between different companies. Within the car industry, for instance, you need a very large amount of data to develop a radically new model. Networks stretching far across national borders became more common, and with them followed ideas and impulses that inspired new products and processes within the economy. In this context, the Swedish companies were introduced to the idea that they − especially
38 part 1 – companies, responsibility and sustainability
The post-industrial work situation is characterised by flexibility, where the workplace is not necessarily in a given physical location and where distances have, in many ways, grown shorter.
on international markets − should take a social responsibility they did not take at home. They met CSR.
But CSR was a foreign concept in the environment characterised by the traditions of the Swedish model. The resistance toward this fundamentally Anglo-Saxon concept was large, which is not surprising, but might warrant an explanation − given how quickly and easily other forms of American influences had gained ground in business, culture and society in general. The CSR concept was contrary to established interest, which had invested in the Swedish model and its organisational structure.
For companies it was strange to imagine stepping into areas they had formerly been freed from taking any interest in. This attitude remained among many economic organisations, which long after the international companies started to understand the meaning of CSR. “Such commitments might be motivated somewhere in the Third World,” asserted the precursor to the Confederation of Swedish Enterprise during the later 1990s. “But not here, where there is a functioning public sector.”
For the unions, the internationalisation of companies during the 1980s and 1990s had already caused problems. The Swedish order of negotiation did not fit the forms that unions in other places used for influence. Having ties to trade union federations with the European community was seen as a kind of specialist task. The unions were strongly characterised by their identities as part of the Swedish model.
Politicians, especially on the left, were hesitant to allow large companies into the monopoly sphere of the public sector, where social matters had been managed. Even from the highest echelons, there was a suspicious tone regarding the mixing of interest in profit and social goals.
Responsibility and sustainability in context – the structure and contents of the book
The example of Sweden shows that the ideas regarding what social responsibility companies are considered to have − and how it should live up to the demands of its surroundings − are not a given. In the Western world, there have been − and continue to be − many different ideas regarding how the relationship between enterprises and society should be shaped. It is not necessary for CSR to take on the same form
throughout the entire world. The concept of CSR can be seen as an expression for hegemony of economic policy based on the Anglo-Saxon industry. Still, there are cultural differences and deviations in traditions and social structures, meaning that CSR will take on different forms. The relationship between industry and society or economy and politics shapes CSR, which will be discussed in several of the chapters in this book.
The structure of the book
This introductory chapter, which highlights the context in which responsibility and sustainability has been discussed, historically and currently, is followed by three separate sections of the book. The first part encompasses Chapter 1 to Chapter 4 and provides a broad overview of CSR and sustainability, as well as introducing and defining various concepts important for the topic. Part 2 consists of four chapters that in different ways highlight companies’ and businesses’ responsibility and sustainability work in practice, from how sustainability is organised in global value chains to consumers’ ethical purchasing decisions and how companies can internally steer and report their sustainability efforts. The third and final part of the book lifts our gaze to a more strategic level, highlighting the role of capital and investments in the sustainability work of companies. The third part also casts light on general sustainability strategies and communication.
This introductory chapter highlights current trends that impact on the discourse regarding CSR and sustainability matters. It also covers the theoretical discussion of what responsibility companies have and how they are made part of society, in particular within the Scandinavian tradition and context, with strong welfare states and division of labour market responsibilities between employees and employers. Some fundamental models, such as the stakeholder model, are explained based on how companies’ responsibilities can be understood and defined. Chapter 2 provides an introduction of CSR, corporate social responsibility. Karolina Windell and Maria Grafström present the underlying ideas, growth of and arguments for CSR. The stakeholder model, which has become framework for determining which entities a company has responsibility towards, is developed and discussed. The chapter also highlights the media’s important role as both a critic and an arena where stakeholders hold companies to account.
40 part 1 – companies, responsibility and sustainability
Chapter 3, written by Susanne Sweet, contains a basic review of companies’ environmental responsibilities and how these have developed and grown connected to the concept of sustainable development. The chapter contains a description of how developmental and environmental issues at the system level have developed and become institutionalised over time, and how they are connected to corporate operations. Important terms and conventions in sustainable development and sustainability are presented. Models for sustainable business that address the strategic challenges facing society and businesses, such as the climate issue, are also described.
In Chapter 4, Lin Lerpold and Laurence Romani provide a basis for and overview of social sustainability and the associated terminology. Starting from important institutional frameworks and conventions, such as the UN Convention on Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and Agenda 2030, they give examples and discuss the roles and operations of companies. They also present the challenges that many countries are experiencing related to international migration and its impact on the labour market and companies, as well as how migrants have contributed to innovation and entrepreneurship. Examples are also given of how large companies have worked with integration and increased diversification of their workforces.
Susanne Sweet and Katarina Arbin write, in Chapter 5, about how the ideas and views of companies’ efforts and responsibilities related to sustainability in production have developed and become integrated into the value chain. They show how companies are expected to take responsibility for their suppliers and clients. It becomes clear how risky it is not to have insight into the supply chain and how important it is for companies to guarantee reasonable environmental work and sound labour conditions among suppliers. Purchasers have particular responsibility to work with sustainability matters in relation to their suppliers. The chapter provides examples of how purchasing organisations can work with these matters. It also describes circular economy, an important strategy in the EU and for companies, related to the provision of input goods in a world that requires more resources.
In Chapter 6, Susanne Swet describes the main stakeholders in the efforts to achieve sustainable consumption: the buyers of goods and services. She presents concepts relevant to sustainable consumption and discusses the consumer’s role and companies’ responsibilities. The chapter also provides an overview of concepts, various market-oriented
instruments, strategies, and models that companies can use to support their work with sustainable business models and help consumers choose a more sustainable consumption.
In Chapter 7, Magnus Frostenson discusses how companies can relate to the ethics of their own organisation and their employees, and how this can be connected to management of a company’s sustainability work. His introduction relates to what a business ethical perspective is and how it can be connected to ethical decision-making in an organisation. An important ethical challenge is corruption; the author describes a few fundamental concept and work methods to prevent corruption in organisations. Further, the chapter includes a guide for how to organise and govern with rules and values to achieve sound and stable ethical competence among leaders and employees.
In Chapter 8, Tommy Berglund reviews the conditions for accounting and reporting regarding corporate sustainability efforts. He describes the standardisation of reports and how they are to be drafted in practice. The new EU directive on sustainability reporting, the CSRD, is at the foreground in the discussion on how the corporate transparency can be continuously improved over time.
Chapter 9 focuses on owners and financial markets. This chapter, written by Emma Sjöström, describes how important investors have become in highlighting responsibility matters, which in this market are referred to as ESG (environment, social and governance issues) or SRI (socially responsible investment). In Europe, two thirds of all capital managed under some form of sustainability criteria can be found in institutions like pension funds. Therefore, such institutions are likely one of the most important and effective entryways for lobbying regarding holding companies to account, for instance as regards fossil-free energy. The chapter also includes descriptions of concepts such as sustainable investments, shareholder value, stakeholder value and various financial instruments and methods for highlighting sustainable investments.
Tommy Borglund has written Chapter 10, which raises the question of how sustainability aspects can be connected to the strategic levels of business. Some companies have already developed sustainability strategies and many others are doing so now, in part because the CSRD requires a more strategic approach. The new concept of financial materiality is crosspollinating with concepts like “Shared Value”, creating new competitive strategies centred on sustainability.
In Chapter 11, Tommy Berglund describes how the communicative aspects of CSR have been crucial for increasing accountability. In an increasingly digitalised, global world, companies need not only to take responsibility but also learn to describe this in a manner that wins and retains their stakeholders’ trust. Furthermore – they must also deliver on what they are expected to communicate.
TOPICS FOR DISCUSSION
1. Discuss different views of what an enterprise is, whose interests it serves and how it can be connected to a common social interest.
2. Does the “licence to operate” model give a reasonable idea of the powers that shape the conditions for the operations of an enterprise? Test this against your own experience. Give examples of parties from the different influential groups and how they act in different cases.
3. Give examples of and discuss how an enterprise could improve the market’s confidence in it through the four paths to trustworthiness presented in this chapter.
4. Discuss similarities and differences between the enterprises of the preindustrial society and the idealised image of a global company with a developed CSR strategy.
Reading suggestions
De Geer, H. (2009). Den svenska historien, modellen och förståelsen för CSR, in 125 år med Corporate Social Responsibility. The Centre for Business History
Johansson, I.-L., Jönsson, S., Solli, R. (2006). Värdet av förtroende. Studentlitteratur
Williamson, O. & Winter, S.G. (1991). The Nature of the Firm: Origins, Evolution, and Development. Oxford University Press
csr and sustainable business introduces many perspectives on corporate social responsibility and sustainable business, as well as how the different perspectives are connected. The discussion is complemented with real examples and cases.
The development within sustainability has been fast. New phenomena, like social entrepreneurship, sustainable business strategies and new financial models relating to sustainability, have grown stronger. New aspects of this edition include CSRD and the new EU regulations, as well as in-depth discussions on sustainability as a business strategy. Theoretical aspects are combined with examples from a large number of companies and organizations.
The text is divided into three parts. The first part provides an overview of the topic, its history and important concepts. The second part covers practices at companies and business operations. In the third part, the focus is on finance, strategies and communication for responsible and sustainable business.
The book gathers some of the most influential experts in the field and is used by many universities and management courses in The Nordics.
CSR and sustainable business is written by Tommy Borglund, Susanne Sweet, with Katarina Arbin, Magnus Frostenson, Maria Grafström, Lin Lerpold, Laurence Romani, Emma Sjöström and Karolina Windell. The authors have long experience of academic research in the fields of CSR and sustainability. ISBN 978-91-523-6666-0