This chapter sets the stage for the remainder of the book by providing a broad overview of the sorts of information asymmetries that exist between producers of potentially dangerous products and those who are tasked with regulating them. Leveraging insights from a diverse set of industries -- aerospace, direct-to-consumer products, pharmaceuticals, and industrial chemicals -- and spanning a wide range of countries, this chapter establishes the surprising degree to which regulators not only are at a disadvantage relative to firms when it comes to acquiring information about product risk but also, as a result, depend on firms to be the primary source of information required to regulate. The chapter then investigates the conditions under which this might allow producers to influence the timing and direction of regulatory change. After establishing the pervasiveness of information asymmetries and dependencies at the domestic level, as well as the resulting opportunities for regulatory bias, the chapter demonstrates why we should expect the very same information asymmetries and biases to be replicated and even exacerbated at the international level.

This chapter starts by discussing the changing overall context in which business, nature and society operate. It is important to understand this context, because it shapes the problems that corporate sustainability aims to address, and it influences how firms can cope with these problems. We then introduce the concept of corporate sustainability. We discuss similarities and differences to related concepts such as corporate social responsibility and business ethics. Next, we review some of the main environmental, social and governance (ESG) issues that firms are asked to address as part of their corporate sustainability commitments. Finally, the chapter reviews four key motivations (instrumental, ethical, stakeholder-based and political) that underpin firms’ corporate sustainability commitments.

This chapter presents an introduction to the relationship between government policy and corporate sustainability. It opens with a review of the dichotomous and related perspectives on government and corporate sustainability, revealing why the question of a relationship is quite contentious. Having established the normative, conceptual and empirical significance of the relationship, it proceeds by indicating the types of corporate sustainability issues that government policies address, the types of policies that are deployed and the alternative corporate responses to such policies. These relationships are illustrated with reference to four well-known corporate sustainability issues: corporate philanthropy, ethical trade, corporate sustainability reporting and corporate taxation. Finally, the chapter focuses on two cases of complementarity between government policies and private initiatives for corporate sustainability, responses to: dangerous work conditions in the Bangladesh ready-made garment industry; and corrupt uses of payments to government by corporations in the extractives industry.

Focusing on firm-level behavior in the US pharmaceutical and agrochemical industries, Chapter 4 provides evidence that companies do indeed seek stricter standards on their own, out-of-patent products in order to boost sales of newer, patented substitutes, even providing negative information about their own products in pursuit of this goal. In order to show this, the chapter leverages petitions submitted by pharmaceutical and agrochemical companies to the US FDA and EPA, respectively, requesting that the agencies place stricter standards or all out bans on products that these companies themselves developed. In the case of the pharmaceutical petitions, the chapter provides evidence that all but one of the requests for a product ban has targeted a drug that is about to lose or has already lost patent protection and for which the company had a more recently patented substitute. This suggests that such requests are not publicly minded attempts to ensure dangerous products remain off the market but, instead, are strategic gambits to boost profits of exclusively produced alternatives. In addition, the chapter provides a statistical analysis of petitions submitted by agrochemical companies and farm groups to show that, whereas farmers are no more likely to seek stricter standards on out-of-patent pesticides, agrochemical companies systematically request stricter standards on these products while requesting more lenient standards on products still enjoying patent protection.

This chapter introduces business model innovation for sustainability as a new way of achieving corporate sustainability. Why is thinking about business models and business model innovation useful in this regard? Because business models are essentially about how companies create value for themselves and for their stakeholders, such as customers, employees or business partners. And value creation, in turn, relates in various ways to the natural environment and society. Hence, the business model perspective is very helpful in dealing with corporate sustainability challenges. In this chapter, we explain how business models support proactive approaches to corporate sustainability; how business model innovation can help integrate sustainability principles (such as efficiency, consistency or sufficiency) into companies’ activities; and how it can help companies extend their value creation potential to be more inclusive towards non-financial stakeholders. Finally, some patterns and tools to develop business models for sustainability are introduced.

The final chapter concludes by first re-outlining the book’s central arguments. The chapter then revisits how the preceding chapters help shed new theoretical light on the source of regulatory barriers while also answering several empirical puzzles, including why similar risks frequently receive dissimilar regulatory treatment, why some nations impose more precautionary regulatory rules than others, and finally what is behind some of the most contentious agricultural trade barriers. Finally, the chapter explores the ethical implications of the book’s central findings and offers several concrete policy recommendations for addressing both the broader information asymmetry problems outlined in the book and the resulting biases that were identified.

Chapter 5 takes a deep dive into the history of US agrochemical regulation in order to show that innovative companies were a major force behind the adoption of institutions that required the precautionary reevaluation of existing products, in opposition to generic producers who stood to lose out from such institutions. Using an original dataset that tracks changes to US agrochemical regulations over a two decade period, the chapter then provides evidence that in the wake of these institutions’ implementation, regulations have become stricter on older, less profitable products over time for reasons that cannot be attributed to health, safety, or obsolescence alone. In addition, the chapter provides evidence that the mechanism behind this outcome is not the political power of producers but rather their ability to leverage their information advantages under a regulatory regime in which products are subject to precautionary reevaluations.

In the concluding chapter of the book, we reflect on the future of corporate sustainability. We summarise the key topics covered in each of the four sections – approaches, actors, processes and issues. We present past and future developments for each of these sections. We also reflect on how some of the tensions as presented in the introduction remain and become core to corporate sustainability debates. Finally, we end on a reflection of our personal roles in advancing sustainability.

Along with traditional organisational forms, such as SMEs and MNCs, a variety of alternative types of organising exist in the business world. As hybrid organisations between traditional for-profit businesses and non-profit organisations, alternative types of organising often integrate social and environmental concerns deeply into their business models. Hence, these organisations aim at combining economic goals with the pursuit to proactively create a positive social and environmental impact.

In this chapter, we will take a deeper look into alternative types of organising for corporate sustainability as a promising pathway to integrate sustainability into the business sector and discuss the challenges they face as well as the social and environmental impact they create. Specifically, we will discuss four examples of these organisations: foundation-owned companies, which are companies that are fully or partially owned by an industrial foundation instead of shareholders; cooperatives, which are community-based organisations that are owned by their members (i.e., individuals who voluntarily join their forces and collaborate); social businesses, defined as organisations that pursue a social or environmental mission while engaging in commercial business activities; and B Corps as a specific form of social businesses, meaning those that have applied for and passed a certain certification process.

This chapter discusses the nature, legitimacy, impact and critique of voluntary standards for sustainability. We first develop a definition of sustainability standards and distinguish three different types of standards. This discussion shows that, while standardisation in the field of sustainability has grown in recent years, existing initiatives differ in several important ways. Next, we discuss how the legitimacy of sustainability standards can be assessed. We differentiate between standards’ input and output legitimacy. We then focus on the impact that sustainability standards can potentially have on adopting firms, end consumers and the regulated issue area. The final section takes a detailed look at the critique that has been raised against selected standards (e.g., the coexistence of multiple standards with a similar purpose).

The final empirical chapter turns to the international level in order to determine whether delegation to an international standard-setter alters the regulatory dynamics identified. Looking at the Codex Alimentarius Commission, the chapter asks whether this institution has been able to ameliorate the regulatory biases found domestically. In order to answer this, the chapter replicates the analysis conducted on agrochemical regulation in the United States, this time looking at changes to standards under Codex. The chapter shows that even though Codex standard-setters are substantially more removed from the domestic political process than regulators in the USA, the Codex Commission has shown as much of, if not a greater tendency to systematically impose stricter standards on out-of-patent agrochemical products. As such, the international standard-setter has ended up placing more onerous rules on more affordable products for reasons that are less based on science than they are based on the absence of scientific information. In addition to showing that international standards have been vulnerable to similar biases as domestic regulations, this chapter also explores how developing countries and generic producers have sought to combat the regulatory barriers that have arisen at the international level and how innovative firms have successfully blocked them.

This chapter discusses the role of ethical reflection in the context of corporate sustainability. It starts by reviewing the relevance of four normative ethical theories (utilitarian ethics, duty-based ethics, virtue ethics and posthuman ethics) for corporate sustainability. Next, the chapter discusses how people in organisations make ethical decisions and which cognitive biases impact our decision-making. In the following section, the chapter asks two essential questions: Why do we need ethics when discussing corporate sustainability? and Can corporations engage in ethical reflection or is this something that only individuals can do? The final section discusses how firms can manage ethics, and we distinguish two orientations that can guide such management: compliance and integrity.