The conventional perspective

Corporate strategy is about matching a firm’s internal resources with its external surroundings in order to secure advantage for the firm in the long term. In the late 1980s and early 1990s, managers began to adjust their strategies in response to changes to external environmental demands. Iconic events – including the Bhopal disaster in 1984, the Exxon Valdez oil spill in 1989, the Montreal Protocol that banned ozone-depleting substances in 1987, the original Rio UN Conference on Environment and Development in 1992, and, later, the Brent Spar controversy in 1995 – all heightened attention on environmental issues. Large, visible companies – particularly in the chemical, oil and natural resources sectors – faced questions from governments, NGOs, investors and the media on how their strategy could be affected by environmental concerns. At the same time, strategy scholars began to look inside firms to understand the foundations of competitive advantage, and they found an answer in the pattern of a firm’s resources and capabilities (Barney Reference Barney1991; Wernerfelt Reference Wernerfelt1984). Corporate environmentalism research began to build on this theory to argue that investing in green solutions could enhance a firm’s internal resources and, ultimately, its competitive position (Hart Reference Hart1995; Sharma and Vredenburg Reference Sharma and Vredenburg1998). Environmental concerns began to influence corporate strategy in both practice and theory.

The conventional perspective on corporate environmentalism focuses on how the natural environment affects firms’ strategies and, ultimately, performance.³ The approach is usually based on injecting environmental concerns into the resource-based view (RBV) of the firm. The RBV was built on an economic analysis of how firms invest and develop idiosyncratic resources to best position their activities to gain competitive advantage (Lockett and Thompson Reference Lockett and Thompson2001; Penrose Reference Penrose1959). Hart (Reference Hart1995) famously adapted the framework to build a natural-resource–based view (NRBV) of the firm. His core insight was to turn potential limitations that firms might face due to resource scarcity and reliance on natural ecosystems into a basis for competitive advantage. Investing in specific strategic capabilities helps firms to build key resources and ultimately can secure competitive advantage. Hart’s three green capabilities – pollution prevention, product stewardship and sustainable development – framed much of the subsequent conventional corporate environmentalism literature. Pollution prevention – or minimising emissions, effluents and wastes – can support a firm’s continuous improvement and lead to lower costs than its competitors. Product stewardship develops a firm’s abilities in stakeholder integration, preempting competitors’ attempts to shape the stakeholder and regulatory environment. Furthermore, sustainable development – that is, minimising the environmental burden of firm growth and development – helps to develop a shared vision and a firm’s future position.

Hart’s NRBV formalised the prospect of win-win corporate environmentalism and offered mainstream strategy theory new insights about the foundations of competitive advantage (Berchicci and King Reference Berchicci and King2008). By investing in green solutions, a firm could develop competitively valuable capabilities (Sharma and Vredenburg Reference Sharma and Vredenburg1998), improve relationships with various stakeholders (Buysse and Verbeke Reference Buysse and Verbeke2003), and enhance its reputation (Russo and Fouts Reference Russo and Fouts1997). Developing a proactive corporate environmental strategy helps firms navigate contingencies in their external environment, thereby contributing to strategic success (Aragon-Correa and Sharma Reference Aragon-Correa and Sharma2003). Numerous tests and extensions of the NRBV demonstrated the potential for investments in different types of green solutions to support a firm’s competitive advantage (Sellers, Verbeke, and Bowen Reference Sellers, Verbeke and Bowen2006).

A central research question in the conventional perspective of corporate environmentalism has been to test the relationship between environmental and financial performance: Does it pay to be green? In theory, firms can lower costs through eco-efficiency in their processes or products. Alternatively, they can differentiate through a reputation for beyond compliance leadership in their organisational processes or gain a price premium through eco-branding (Orsato Reference Orsato2006). However, the debate continues about how widespread these gains might be in practice, and recent reviews reveal mixed empirical evidence (see, e.g., Molina-Azorín et al. Reference Molina-Azorín, Claver-Cortés, López-Gamero and Tarí2009 and Stefan and Paul Reference Stefan and Paul2008).

Because conventional corporate environmentalism research originates in economics and strategic management, there is an understandable focus on the private costs and benefits of green solutions for firms. However, this perspective is rightly criticised for giving too little attention to whether corporate environmentalism actually improves the natural environment. Conventional research focuses on the more easily visible and widely available indicators of environmental performance, such as adopting recognised labels, joining schemes and measures of single environmental issues (e.g., toxic emissions and climate change) (Etzion Reference Etzion2007; Russo and Minto Reference Russo, Minto, Bansal and Hoffman2012; Whiteman et al. Reference Whiteman, Walker and Perego2012). Even studies based on the same green solution can give contradictory results. For example, Pototski and Prakash (2005) found a positive relationship between the adoption of the ISO 14001 environmental management standard and substantive environmental improvements, whereas Russo and Harrison (Reference Russo and Harrison2005) found a negative relationship.

Conventional corporate environmentalism researchers sent insightful ‘postcards from the edge’ of established strategy and economics theory, shedding light on the origins of competitive advantage and on industry self-regulation (Berchicci and King Reference Berchicci and King2008). This ‘second wave’ of corporate environmentalism placed green issues in the context of a firm’s overall strategic management (Hoffman and Bansal Reference Hoffman, Bansal, Bansal and Hoffman2012). Focused on showing the firm-level competitive benefits of green solutions, it also introduced a new language of corporate environmentalism into contemporary business based on eco-efficiency, sustainability, and environmental win-wins.

The critical perspective

There is no doubt that the conventional perspective helped to bring concerns about the natural environment into conversations at corporate board meetings, business school conferences and academic journals. However, a set of alternative, critical perspectives argues that ‘what business and the natural environment research has succeeded in doing is to add the prefix “sustainable” to mainstream accounts of organisational theory that continue to privilege growth, production and consumption’ (Banerjee Reference Banerjee, Bansal and Hoffman2012: 579). Advocates of a critical view point out that the corporate environmentalism of the conventional view should more accurately be thought of as a new corporate environmentalism because this particular version of corporate responses to environmental pressures evolved only in the past fifteen years or so as a product of its sociohistorical moment. A more critical view points out that new corporate environmentalism functions as ‘the rhetoric concerning the central role of business in achieving both economic growth and ecological rationality, and as a guide for management that emphasises voluntary, proactive control of environmental impacts that exceed or go beyond environmental laws and regulatory compliance’ (Jermier et al. Reference Jermier, Forbes, Benn, Orsato, Clegg, Hardy, Lawrence and Nord2006: 618; emphasis in the original). The critical perspective looks past a firm-level analysis of corporate environmental strategy, positioning and competitively valuable resources and instead questions the structure and consequences of the rhetoric surrounding green solutions at the social-system level. The critical view asks: What does corporate engagement with a broader social conversation do to the potential solutions presented to pressing environmental challenges, and which solutions are ultimately preferred and implemented?⁴

A critical view highlights the fundamentally political nature of corporate environmentalism (Crane, Matten, and Moon Reference Crane, Matten and Moon2008). Corporate involvement in inventing, selling, appropriating and deflecting green solutions is ‘first and foremost about control’: the critical questions are to ask who does and who should control the impact of industrial production on the environment (Jermier et al. Reference Jermier, Forbes, Benn, Orsato, Clegg, Hardy, Lawrence and Nord2006: 627). Critical researchers look beyond the conventional answer that managers and firms can and should self-regulate at the corporate, industry-sector or national level. Reducing complex, dynamic and interconnected environmental effects and portraying them as controllable oversimplifies the challenges ahead. A critical approach problematises the conventional received wisdom that business must have a key leadership role in a transition to a greener economy, whereas government’s role is minimised. The discourse surrounding rational solutions to environmental challenges serves to maintain power structures and systems of influence that privilege corporate views.

The control problem boils down to two related corporate projects: controlling rhetoric and controlling access to resources. First, well-resourced and highly central firms have amassed considerable rhetorical and communicative skills that enable them to control the rhetoric surrounding corporate environmentalism. As Karliner (Reference Karliner1997: 32) stated, transnational firms have ‘appropriated the language and images of ecology and sustainability in an effort to ward off the threat that the environmental movement might convince the world’s governments to force them to make much more far-reaching changes’. Large firms use extensive public relations and communications machinery to directly communicate about their corporate environmentalism and to indirectly limit the range of possible futures. The more visible ‘war of ideas’ (Beder Reference Beder1997) related to corporate greening involves privately funded PR, front groups, think tanks, advertising and campaigns. More insidiously, environmentalism has been ‘hijacked’ as ‘senior executives and their business clubs’ reconstruct the environmental agenda (Welford Reference Welford1997: x). Corporate executives and policy makers do not necessarily aim to eliminate debate or controversy because it is needed to maintain the (mis)perception of a functioning social debate. Rather, what is important is to maintain ‘the power to limit the subject, scope and boundaries of the controversy’ (Beder Reference Beder1997: 282–283).

An important way in which powerful social actors reconstruct the environmental agenda is by reframing the environmental discussion from a source of problems to a source of solutions. As discussed previously, conventional perspectives promote win-win environmental initiatives, such as eco-efficiency, waste reduction and pollution prevention; managers simply need to find the profitable or socially acceptable ways to integrate green concerns to support their corporate strategy. Critical theorists resist redefining greening as an extension to ‘business as usual’. They see the language of win-win solutions as a discursive device, removing environmental concerns from a conversation on moral responsibility and instead centring them in a technocratic, seemingly rational, and ultimately less threatening frame (Crane Reference Crane2000). Further symptoms of the capture of solutions include the rise of the ‘sustainable development industry’ (Springett Reference Springett2003) and, indeed, the rise of voluntary labels, codes, standards and everyday greening symbols that are at the core of this book. The critical view sees the solution-oriented discourse as a signal of corporate control over the rhetoric of greening.

The second dimension of the control problem involves controlling resources. The contestation over framing environmental issues is about maintaining current levels of access to the Earth’s natural, physical and biophysical resources. The critical view is suspicious of tools common within the conventional perspective, such as the NRBV of the firm and valuing ecosystem resources because they simply subsume or co-opt natural resources into business as usual. Instead, critical theorists point out that these managerial devices are ways of diminishing the value of indigenous knowledge and ways of being – privileging Western frames over ecological sensemaking (see, e.g., Banerjee Reference Banerjee2000 and Whiteman and Cooper Reference Whiteman and Cooper2011). Corporate control of natural resources is framed as another expression of neo-colonialism by large multinationals thirstily exploiting historical power relations to access natural resources wherever they can do so at lowest cost. This dynamic is all the more damaging because poor or marginalised groups are more likely to be the victims of disproportionate environmental damage (Shafik Reference Shafik1994). Thus, critical theorists are closely connected with the environmental justice movement, whether inequity is focused on the developing countries at the world scale or on marginal communities in richer countries.

Focusing on the political nature of corporate environmentalism invites questions about who is included and excluded in the environmental conversation. Critical organisational theorists ask who has the political skill and connections to exploit access to resources, as well as when and how they exert that control. Corporations have the means to engage in direct political influence through lobbying, think tanks and political action committees. At the global level, corporate diplomacy has become highly organised, with large companies participating in multilateral negotiations related to international environmental or trade rules either on their own behalf or through industry consortia. In her penetrating analysis of the global food supply, for example, Shiva (Reference Shiva2000) traced how local food markets and policies were captured by large companies from North America and Europe and their influence on the international trade regime. Even environmental groups have been criticised for being elitist and imperialist. Race is the most important determinant of the location of risk-producing activities or, as economists might describe them, ‘disamenities’ (Shafik Reference Shafik1994). Yet, the role of race in reinforcing entrenched environmental inequalities too often is missing from analyses of the control of natural resources (Newell Reference Newell2005). As Jermier et al. (Reference Jermier, Forbes, Benn, Orsato, Clegg, Hardy, Lawrence and Nord2006) reminded us, even the multiplication of environmental social movements has not necessarily led to wider participation in environmental decision making because mainstream environmental groups need to gain access to power and resources to ensure their own survival.

A critical perspective on corporate environmentalism pays attention to underlying power structures, promotes ecological learning, broadens debate in the public sphere, emphasises citizenship capabilities and encourages inclusion. The most important contribution of critical corporate environmentalism is that theorists and managers should appreciate the fact that dominant discourses related to corporate environmentalism are constructed by the most powerful members of a social field. We should observe who decides what it means to be green. Critical theorists’ emancipatory and deliberative instincts invite managers and researchers to resist the conventional view’s reassuring integration of green issues into strategic concerns and to open conversation to a wider range of possible alternatives.

Comparing the corporate environmentalism perspectives

Table 3.1 summarises the previous discussion about the two main sets of perspectives on corporate environmentalism. The conventional perspective asks questions about firm-level environmental strategy and performance: Does it pay to be green? When, why and how? In contrast, the critical perspective interrogates the role of corporations as mediators and constructors of discourse surrounding environmental degradation and its implications. The focus is more on asking what it means to be green and who has the power to decide the answer and how. The two views evolved from entirely different families within the philosophy of science.⁵ The conventional perspective is broadly based on variants of positivist thought, which assumes that there is a single reality ‘out there’ about which we can gather empirical evidence and use it to develop and test quite general social laws, similar to how we might for physical laws. However, the critical perspective is built on more constructivist foundations. This family of corporate environmentalism takes a critical stance with respect to taken-for-granted knowledge. It assumes that the concepts and categories we use to understand the world are historically and culturally specific, and it emphasises that our knowledge of the world is created and sustained by interpretations, particularly through language and symbols. It also assumes that behaviour and interpretation cannot be separated. Just as positivist views are ‘dominant and traditional’ in Western thought (Welford Reference Welford1997: 45), perspectives on corporate environmentalism based on a positivist frame emerged as the conventional new corporate environmentalism in the past two decades. The conventional view’s assumed objectivity makes it easier to bring the conventional corporate environmentalism’s arguments, language and findings into corporate boardrooms and policy circles. But it also has the disadvantage in that the role of power in enabling some actors to control the rhetoric and resources surrounding environmental degradation is vastly underexplored in the conventional literature.

Table 3.1 Comparing two perspectives on corporate environmentalism

^* For more detailed definitions of legitimacy, reputation and status, see Table 3.2.

Thus, corporate environmentalism theory and practice is based on (at least) two fundamentally different perspectives. Conventional perspectives examine how natural environment issues are affecting business and how managerial decision making needs to change to manage them. Critical perspectives question how managers and organisations are defining and constructing the social conversation about environmental degradation in order to control access to the natural environment. There is an extensive and ongoing discussion within organisational theory – and the philosophy of science more broadly – on whether these two worldviews are intrinsically incompatible. Without discussing the details of those debates, it is sufficient to note that these views have fundamentally different implications for the theory and practice of corporate environmentalism. The corporate environmentalism research conversation is active within both perspectives; however, the premier business academic journals tend to publish more papers from the conventional view rather than the critical view. Both perspectives also are in evidence in management training and even management practice, in which we can contrast the conventional focus on management strategies, systems and processes with approaches that emphasise critical reflection, mindful leadership and deliberative processes.

To attempt to fully integrate or reconcile these two different worldviews would be a monumentally ambitious and possibly foolhardy enterprise. Nevertheless, given the urgency of environmental problems and the increasing legitimacy of conventional environmental research and practice, it seems vital to use aspects of the critical view to deepen conventional insights. Philosophical differences too easily can become an excuse for the critical and conventional camps to talk past one another. In this book, I hope to contribute to the more modest task of seriously interrogating each perspective’s assumptions about symbolic corporate environmentalism and to use this to generate deeper insights into when green solutions are in the best interest of society and when they are not.

Symbolic performance

Symbolic performance is the extent to which an action – in this case, investing in green solutions – generates positive social evaluations (Heugens and Lander Reference Heugens and Lander2009). Managers implementing green solutions may be trying to improve their firm’s impacts on the natural environment – that is, improving substantive performance – but they are also at least partly trying to improve their firm’s symbolic performance as evaluated by stakeholders. According to the conventional view, managers are attempting to signal their firm’s quality or social appropriateness through corporate environmentalism. The critical view emphasises how new corporate environmentalism helps a firm maintain the established social order. Organisational theorists and economists usually operationalise symbolic performance as a firm’s reputation, legitimacy or status. Conventional approaches emphasise the reputation and legitimacy dimensions of symbolic performance, whereas critical perspectives highlight the role of status (see Table 3.1). Recently, organisational theorists have given more attention to the similarities and differences among each of these dimensions of symbolic performance and their implications for symbolic behaviour.⁷ All three dimensions can be indicators of symbolic performance, but reputation, legitimacy and status are quite distinct concepts, each of which is relevant to understanding symbolic corporate environmentalism (Table 3.2 is a summary). There is insufficient research on how reputation, legitimacy and status interrelate to underpin symbolic corporate environmentalism.

Table 3.2 Evaluating symbolic performance: Legitimacy, reputation and status

Sources: Adapted and expanded from Bitektine (Reference Bitektine2011); Deephouse and Carter (Reference Deephouse and Carter2005); Deephouse and Suchman (Reference Deephouse and Suchman2008); Devers et al. (Reference Devers, Dewett, Mishina and Belsito2009); Lange, Lee, and Dai (Reference Lange, Lee and Dai2011); Rao (Reference Rao1994); and Washington and Zajac (Reference Washington and Zajac2005).

Reputation is ‘a set of attributes ascribed to a firm, inferred from the firm’s past actions’ (Weigelt and Camerer 1988: 443) or an indicator of the ‘firm’s relative success in fulfilling the expectations of multiple stakeholders’ (Fombrun and Shanley 1990: 235). Most useful here is the dimension of reputation that Lange, Lee, and Dai (Reference Lange, Lee and Dai2011: 155) identify as ‘being known for something’ or the ‘perceived predictability of organisational outcomes and behaviour relevant to specific audience interests’. A good reputation is a signal of firm quality and behaviour, which can differentiate it from its competitors. Reputations are intangible and socially complex, making them difficult to imitate and a potential source of sustainable competitive advantage (Barney Reference Barney1991; Roberts and Dowling Reference Roberts and Dowling2002). Because of this potential to gain advantage from reputation, strategy scholars and information economists devote considerable theoretical attention to the economics of signalling and reputation (see, e.g., Axelrod Reference Axelrod1984, Camerer Reference Camerer2003, and Connelly et al. Reference Connelly, Certo, Ireland and Reutzel2011).

Conventional research has found that corporate environmentalism influences reputation at the industry, firm and product levels. For example, King, Lenox, and Barnett (Reference King and Lenox2002) analysed a ‘reputation commons problem’, wherein firms in the same industry can be ‘tarred with the same brush’. Firms strategically adopt various types of green solutions in order to navigate their industry’s reputation. At the firm level, corporate environmentalism is more likely to lead to reputational benefits when environmental issues are highly salient (Brammer and Pavelin Reference Brammer and Pavelin2006). Philippe and Durand (Reference Philippe and Durand2011) agree that signalling compliance with social norms has a positive impact on reputation and that this positive effect is stronger when signals about environmental goals are supported by signals of procedural commitment. This highlights a key problem with green reputation: to gain from a positive reputation, firms must overcome the problem of establishing the credibility of information about environmental quality (Jahn, Schramm, and Spiller Reference Jahn, Schramm and Spiller2005; Reinhardt Reference Reinhardt1998).

Whereas reputation emphasises the economic advantages to firms of being different, legitimacy captures the sociopolitical benefits of conforming to social norms. A central tenet of institutional theory is that when managers face uncertainty about an organisational practice, they may adopt it to be perceived as socially acceptable and appropriate rather than basing their decision on rational efficiency criteria (Lawrence Reference Lawrence1999; Meyer and Rowan Reference Meyer and Rowan1977). As firms adapt to institutional pressures, stakeholders such as shareholders, government, NGOs and other firms determine whether the firm fits with social norms (Dacin, Oliver, and Roy Reference Dacin, Oliver and Roy2007). Evaluating symbolic performance through legitimacy is rooted in neo-institutional social theory, in which organisations are understood to be subject to isomorphic pressures that make them more alike over time, gradually defining which behaviours and practices are acceptable within a particular social field (see Deephouse and Suchman Reference Deephouse and Suchman2008 and Bitektine Reference Bitektine2011 for detailed reviews). The legitimacy concept also has branched out from sociology and is commonly used within legal scholarship that examines the connections among legal frameworks, social norms and decision making (see, e.g., Edelman and Suchman Reference Edelman and Suchman1997 and Posner Reference Posner2002), as well as increasingly within psychological studies of why individuals adhere to social norms (see Tyler Reference Tyler2006 for a review). Across all of these literatures, evaluating symbolic performance as legitimacy involves asking whether a particular organisation or its activities are acceptable, appropriate, expected or endorsed or if it fits with norms. Thus, legitimacy is a dichotomous variable in the sense that an organisation either does or does not have legitimacy in a particular decision domain.

Because legitimacy reflects the extent to which firms are meeting societal expectations, it is a popular concept within both the conventional and critical corporate environmental literatures. The conventional approach tends to emphasise the extent to which the approval of various stakeholder groups influences environmental strategy (see, e.g., Darnall, Henriques, and Sadorsky Reference Darnall, Henriques and Sadorsky2010 and Kassinis and Vafeas Reference Kassinis and Vafeas2006). In contrast, the critical approach delves more deeply into the processes by which firms seek and earn legitimacy through their environmental discourses and actions (see, e.g., Crane Reference Crane2000 and Fineman and Clarke Reference Fineman and Clarke1996). Although strategic management scholars typically are more interested in what makes firms different from rather than similar to one another, the environmental context has proven useful for unpacking the more nuanced aspects of corporate legitimacy management. For example, Delmas and Toffel (Reference Delmas and Toffel2008) demonstrated how firms emphasise green solutions in domains that are crucial for maintaining legitimacy. Active legitimacy and impression management on green issues has been shown to decrease company-specific stock market risk (Bansal and Clelland Reference Bansal and Clelland2004).

It is popular in the conventional view to contrast economically based reputation motives with more sociopolitically based legitimacy motivations for symbolic corporate environmentalism. However, there has been far less focus on the role of status in driving environmental decision making. Washington and Zajac (Reference Washington and Zajac2005: 284) defined status as the ‘socially constructed, inter-subjectively agreed-upon and accepted ordering or ranking of individuals, groups, organisations or activities in a social system’. Status is fundamentally different from legitimacy and reputation in that it is explicitly hierarchical and distinguishes particular individuals or organisations as worthy of privilege or prestige. An organisation’s status, as reflected by its positional ties within a network or market, influences how other social actors evaluate it under uncertainty (Podolny Reference Podolny1994, Reference Podolny2001). High-status actors are awarded higher symbolic performance than lower-status actors even if their output is the same. This so-called Matthew effect (Merton Reference Merton1968), which is found in a diverse range of organisational contexts, emphasises how symbolic performance evaluations are shaped by social positions. Sociologists typically assume that such positional status is unearned and often is misrecognised by those who grant it because they do not see the arbitrary power structures that underpin these distinctions (Bourdieu and Nice Reference Bourdieu and Nice1984). In contrast, psychology has a long tradition of analysing individuals’ status-seeking behaviours (see, e.g., Hyman Reference Hyman1942 for a classic review and Huberman, Loch, and Önçüler Reference Huberman, Loch and Önçüler2004 for a contemporary review). Recent work has begun to explore the potential of greening to generate symbolic performance in the sense of social status (see, e.g., Dastrup et al. Reference Dastrup, Zivin, Costa and Kahn2012), but this is still a largely unexplored area.

An advantage of evaluating symbolic performance through status is that this hierarchical approach brings power and relational positions explicitly into the analysis. Privileged individuals and organisations are granted more authority to define appropriate responses to social demands than those with less power. In the environmental context, high status and authority can lead directly to authorship of key green standards and codes. Popular and well-established standards such as the LEED building standards in the United States and the ISO 14001 certification series may appear, at first glance, to be impartial endorsements of firms’ green performance. But a closer look reveals that key industry players were heavily involved in the authorship of both schemes, which have largely displaced the more rigorous standards that were originally proposed.⁸ Scholars bridging organisational theory and political science have asked how authority is granted to particular green symbols, calling for more attention to be given to which social actors dominate policy networks related to particular environmental issues (see, e.g., Cashore Reference Cashore2003 and Cashore and Vertinski Reference Cashore and Vertinsky2000). The lesson for conventional corporate environmentalism researchers is to be more observant of the role of status in framing evaluations of legitimacy and reputation in the greening context. Symbolic performance evaluations are reflections of not only firms’ relative quality or social acceptability but also of their social rank.

Symbolic performance, then, can be an evaluation of a firm’s reputation, legitimacy or status. It is evaluated by stakeholders who observe firms’ green solutions as signals, symbols and symbolic capital. The differences among signals in the sense used by information economists – and the broader symbols indicating conformance with social norms – have been long established within organisational theory (see, e.g., Feldman and March Reference Feldman and March1981). Signals typically are deliberate communications of positive information about an unobservable characteristic in an effort to convey positive organisational attributes (Connelly et al. Reference Connelly, Certo, Ireland and Reutzel2011), whereas symbols are ‘an image that refers to a system of beliefs that are generally known, if not necessarily shared, by the person who observes the symbol’ (Posner Reference Posner2002: 112). The emerging literature on greenwashing is largely interested in deliberate communication or disclosure of signals; however, there is a much broader symbolic domain surrounding corporate environmentalism. Furthermore, that symbolic domain also includes cultural symbols that are granted higher symbolic performance because of the status of those associating with them. Moving beyond conventional corporate environmentalism’s concerns about reputation and legitimacy to include status also requires moving beyond signals and symbols to consider ‘symbolic capital’. An individual or organisation can gain symbolic capital when it possesses cultural symbols that are associated with high prestige, whether or not that prestige is warranted.⁹ To date, there has been little or no analysis of symbolic performance as it relates to the production and maintenance of symbolic capital in the greening context.

Throughout this book, I explore how reputation, legitimacy and status are interrelated in underpinning symbolic corporate environmentalism. Although corporate environmentalism research has separately relied on each of these symbolic performance dimensions, it is rare to integrate across all three dimensions to argue when each might be particularly important. Specifically, conventional corporate environmentalism research gives too little attention to the role of status and symbolic power in legitimacy seeking.

Symbolic gaps

A ‘symbolic gap’ is the difference between a firm’s symbolic performance – in the sense of positive social evaluations – and substantive environmental improvements. A key empirical finding within corporate environmentalism in recent years is that there seem to be persistent symbolic gaps around firms’ environmental performance. This presents a compelling puzzle: If much corporate environmentalism is understood to be symbolic, why are symbolic gaps not exposed and symbolic performance evaluations adjusted to match substantive environmental performance? An answer based on greenwashing would suggest that firms’ communication strategies are somehow so sophisticated and so poorly monitored that their deliberate attempts to exaggerate, deflect or otherwise disconnect their symbolic from substantive environmental actions are not noticed by stakeholders. Alternatively, even if greenwashing is noticed, stakeholders are powerless to do anything about it. But we should remember an important difference between greenwashing and broader symbolic corporate environmentalism: whereas greenwashing is based on a firm’s deliberate communicative efforts, symbolic gaps are based on social evaluations assigned to firms by interested stakeholders, which managers may be able to control to only a limited extent. Greenwashing is assumed to be deliberate in the sense that a company produces the greening communications. However, symbolic gaps can be the deliberate or unintended consequence of corporate environmentalism because symbolic performance is a social evaluation that is only partly determined by a firm’s own actions.

There is a significant amount of research literature on the gap between what firms say and do in the broader organisational theory and strategy literatures. Often framed as contrasting ‘talks and actions’ or ‘rhetoric and reality’,¹⁰ organisational theory studies emphasise decoupling; that is, organisations only ceremonially adopting new practices to meet social demands without necessarily fully implementing them (Meyer and Rowan Reference Meyer and Rowan1977). Alternatively, strategy scholars often present symbolic gaps as a strategy implementation process problem, in which top managers’ stated intentions and visions run ahead of implementation actions deep inside the firm (Andrews Reference Andrews1971). Marquis and Toffel (Reference Marquis and Toffel2012) recently added a more deliberate ‘attention-deflection’ strategy, in which managers deliberately adopt alternative but acceptable practices to avoid being coerced into potentially more costly alternatives.

So far, corporate environmentalism researchers have relied most heavily on decoupling explanations for symbolic gaps. Recent organisational theory research on decoupling addresses how symbolic gaps evolve over time (Tilcsik Reference Tilcsik2010), simultaneous causes and consequences (Weber, Davis, and Lounsbury Reference Weber, Davids and Lounsbury2009), and effects on organisational insiders (MacLean and Behnam Reference MacLean, Harvey and Chia2010). Bromley and Powell (Reference Bromley and Powell2012) argue powerfully that in our contemporary, more highly monitored and audited society, decoupling may be shifting from a gap between policy and practice to a gap between means and ends. Other researchers recently revisited Tolbert and Zucker’s (Reference Tolbert and Zucker1983) classic insight that late adopters of a new practice are more likely to only symbolically adopt a practice to gain social legitimacy (see, e.g., Delmas and Montes-Sancho Reference Delmas and Montes-Sancho2010; Kennedy and Fiss Reference Kennedy and Fiss2009). However, these contributions downplay an important corollary to decoupling: because institutional pressures lead to decoupling, organisations will do their best to avoid scrutiny – or at least attempt to control the process of scrutiny (Boxenbaum and Jonsson Reference Boxenbaum, Jonsson, Greenwood, Oliver and Sahlin-Anderson2008: 81). This raises questions about how the strength of monitoring and the relative power between firms and those that monitor them influences the potential for persistent symbolic gaps.

Evidence suggests that firms are likely to decouple when there is strong pressure from market stakeholders including suppliers, customers and shareholders (Oliver Reference Oliver1991; Stevens et al. Reference Stevens, Steensma, Harrison and Cochran2005) but also that adoption is more likely to be substantive when it is monitored (Christmann and Taylor Reference Christmann and Taylor2006). Similarly, although managers may become more aware of the potential for decoupling through their social networks (Westphal and Zajac Reference Westphal and Zajac2001), social networks can be a source of support for monitoring whether or not adoption is substantive (Lounsbury Reference Lounsbury2001). Thus, although late adopters may be tempted to adopt symbolically for social legitimacy reasons (Tolbert and Zucker Reference Tolbert and Zucker1983), these same adopters may find themselves in a stronger normative context in which both the practice and the monitoring stakeholders are more mature (Phillipe and Durand 2011).

The primary fault line in the literature on symbolic corporate environmentalism is whether symbolic gaps are deliberate or an unintended consequence of the incentives and social structures within which managers operate. The greenwashing literature tends to portray symbolic gaps as deliberate, almost by definition. Recall some of the definitions of greenwashing in Chapter 2: ‘the act of misleading consumers regarding the environmental practices of a company’ (Delmas and Burbaro Reference Delmas and Burbano2011: 66; emphasis added); ‘a strategy that companies adopt to engage in symbolic communications of environmental issues without substantially addressing them in actions’ (Walker and Wan Reference Walker and Wan2012: 227; emphasis added); and firms ‘creatively manag[ing] their reputations’ (Laufer Reference Laufer2003: 255). These definitions imply some agency for firms – or at least managers within them – in deliberately opening up a gap between symbol and substance.

A strategic approach to corporate environmentalism tends to support this deliberate view of symbolic gaps. Economists commonly model corporate environmentalism as a strategic game in which firms can choose levels of substantive and symbolic environmental performance and in which activist stakeholders monitor, audit and sanction noncomplying firms depending on the information available to them (see, e.g., Lyon and Maxwell Reference Lyon and Maxwell2011). Marquis and Toffel (Reference Marquis and Toffel2012) identify three deliberate symbolic compliance strategies in addition to decoupling. ‘Social image bolstering’ is when firms adopt green solutions to enhance their reputation and deflect attention from less admirable activities, such as when they selectively and strategically adopt symbols, eco-labels and certification schemes (Corbett and Muthulingam Reference Corbett and Muthulingam2007; Darnall and Kim Reference Darnall and Kim2012). ‘Substitution’ is when organisations create a less rigorous practice as a substitute to practices demanded by stakeholders. Examples include the commitment to use only Sustainable Forestry Initiative (SFI)–accredited wood products rather than the more stringent Forest Stewardship Council (FSC)–certified products (Cashore Reference Cashore2003) and the active promotion of carbon markets and earning carbon neutrality labels by offsetting rather than direct emissions reduction (Meckling Reference Meckling2011). The third strategy, ‘selective disclosure’, is the strategy most similar to greenwashing, in which firms disproportionately disclose positive information to create an impression of environmental proactivity and social conformance. There is a long history of scholarship in accounting that shows how firms selectively reveal information about their environmental performance in an attempt to gain social legitimacy.¹¹

The critical view also often argues that firms deliberately open up symbolic gaps. A core assumption about symbolic behaviour is that ‘through symbols, humans have the capacity to stimulate others in ways other than those in which they themselves are stimulated’ (Welford Reference Welford1997). By publishing an environmental report or painting a reception area green, for example, firms hope to favourably influence stakeholders, even if they themselves are polluting. Karliner (Reference Karliner1997) argued that the symbols, language and messages of corporate environmentalism are deliberately designed to deflect environmental demands. Firms cope with institutional pressures by setting up symbolic diversions. In this ‘war of ideas’, symbolic diversions such as corporate front groups, weak self-regulatory mechanisms and green window-dressing are all the more dangerous because they are designed to go unnoticed (Beder Reference Beder1997).

However, there is another way of looking at the emergence of symbolic gaps that does not rely on deliberate, malicious or devious corporate activities. Symbolic gaps can arise as an unintended consequence of other corporate or social processes for at least four reasons. First, symbolic gaps can be an unintended consequence of profit-maximising investments in green solutions. As discussed in more detail in Chapter 4, firms choose to invest in particular green solutions for strategic, profit-maximising reasons. But we need to understand corporate environmentalism as a strategic process that is as fallible as any other change process within an organisation. Winn and Angell (Reference Winn and Angell2000: 1131) admitted that ‘unrealised greening’ can be a consequence of deliberate greenwashing, but it also can be seen as ‘an intermediary stage for firms in the process of ramping up to implementation’. Symbolic gaps also can arise through a simple disconnect between upper and middle management: some strategies simply do not become realised despite the best intentions of top managers (Mintzberg and Waters Reference Mintzberg and Waters1985). Announcing investments or committing resources to adopt a particular green solution does not necessarily guarantee that it will be fully implemented within the organisation. This opens up the possibility that firms may be rewarded through positive symbolic performance evaluations for adopting the green solution – even if it does not result in substantive improvements.

Second, symbolic gaps can arise from inertia. Internal inertia arises from existing firm structures and incentives, which explain a natural lag between senior management’s declaration of commitment and the adaptions needed in the rest of the company to realise that intention (Delmas and Burbano Reference Delmas and Burbano2011). Highly specific knowledge, organisational structures and poor communication can lead to knowledge-transfer difficulties among the marketing, product development, operations, legal, communications and other functions that need to collaborate on environmental issues. Outside of the firm, there can be a broader social inertia that tends to favour early, satisficing solutions to environmental problems. Moreover, any given green solution tends to gradually ‘thicken in apparent objectivity’ over time (Welford Reference Welford1997). Because it can be difficult to break out of current language, symbols and acceptable solutions, it often is easier to repurpose or adopt existing words, solutions or symbols, which further feeds inertia. The result is that green solutions can become unchangeable social facts that are passed on to new field members – even if the solution does not positively impact the environment.

Third, symbolic gaps can arise as an unintended consequence of managerial cognitive biases. Managers may suffer narrow decision framing, hyperbolic inter-temporal discounting or optimism biases that lead them to overstate what might be possible in terms of green solutions or to underperform in implementation (Delmas and Burbano Reference Delmas and Burbano2011). The broader strategic management literature is beginning to more seriously integrate cognitive and social psychology with standard strategic management theory.¹² Symbolic corporate environmentalism could be a fruitful context within which to deepen and empirically test explanations for persistent symbolic gaps arising from cognitive biases. For example, Walker and Wan (Reference Walker and Wan2012) point out that substantive performance evaluations are based on what firms have done in the past, whereas symbolic performance often is based on statements about what firms plan to do in the future. Optimism bias can lead managers to overstate the potential of future-oriented green solutions. If the desired substantive changes subsequently do not occur, this could lead to a symbolic gap. Alternatively, given the uncertainty surrounding green solutions, managers’ decision framing often is based on analogical situations and how to cope with similar decision situations. Yet, unthinking analogical strategic decision making can lead decision makers astray (Gavetti, Levinthal, and Rivkin Reference Gavetti, Levinthal and Rivkin2005). Over-reliance on proactive metaphors and discourse can entrench persistent gaps between the rhetoric and the reality of corporate greening (Milne, Kearins, and Walton Reference Milne, Kearins and Walton2006). Even well-intentioned attempts to frame unfamiliar greening choices as similar to other management innovations such as the introduction of total quality management or adapting to new trade regulations can open up a gap between proactive-sounding symbolic components and less-impactful material components of green solutions.

Finally, a more critical approach emphasises that symbolic gaps arise because of broader sociopolitical processes within the political economy of late capitalism (Bromley and Powell Reference Bromley and Powell2012; Fleming and Jones Reference Fleming and Jones2013). Consumers and producers are trapped within a ‘culture of consumption, materialism and greed which now dominates human behaviour in the West’ (Welford Reference Welford1997: ix). It is difficult to break through the entrenched interests of incumbent firms within the status quo. New ideas – particularly those that might challenge current production and political processes – do not have legitimacy, especially if they emerge from the fringes of the field, as with environmentalism. Threatened incumbents experience safety in numbers from stakeholder scrutiny, so there is a tendency to adopt whatever labels and language are available rather than question whether they actually are fit for purpose. We should remember that the myths surrounding ceremonial behaviour and decoupling are apparently ‘rational’ in the sense that both producers and consumers of green solutions value reassurance that something is being done on environmental issues – even if that ‘something’ is not particularly effective (Boiral Reference Boiral2007). Yet, symbolic performance is not necessarily based on earned improvements in practices. Symbolic performance can be misrecognised as stakeholders award firms positive social evaluations but do not notice that their esteem is based on status rather than environmental improvements. This power dynamic serves to reinforce the social structures within the economy (Bourdieu Reference Bourdieu2005).

Some symbolic corporate environmentalism, and the symbolic gaps that arise from it, is deliberate. But if we are interested in understanding corporate environmentalism within a mature issue domain, then we also need to account for emergent strategies and their sometimes unintended consequences. Analysing broader symbolic gaps rather than more specific greenwashing is useful because it goes beyond deliberate communicative practices, which fuels a sensible suspicion of voluntary environmentalism. We do need symbols of corporate environmentalism to help with an information asymmetry problem. We also need to be aware of persistent symbolic gaps, ideally without fully adopting the pessimism and scepticism of the critical perspective. A core question in this book is about when symbolic gaps are likely to emerge and when they will continue to be persistent. In answering this question, I join efforts to explore the boundary conditions around conventional corporate environmentalism by injecting useful ideas from the critical view on power, status and dominant discourse (Banerjee Reference Banerjee, Bansal and Hoffman2012). Moving beyond greenwashing to symbolic gaps builds more realistic foundations and better normative implications for conventional corporate environmentalism research.