Is corporate social responsibility effective in improving environmental quality? Literature review

Nicolas Piluso ()

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Abstract: Considering continuing environmental degradation linked to economic activity, it seems essential to examine the role companies can play in implementing sustainable development. This study aims to analyze lessons learned from standard theories on the effectiveness of corporate social and environmental responsibility. Indeed, corporate social responsibility and state intervention are frequently compared under the dual lens of collective well-being and environmental quality. For some economists, corporate social responsibility is preferable to state intervention from the point of view of maximizing collective well-being. By contrast, according to some other authors, state intervention is more effective for both maximizing well-being and protecting the environment. This literature review shows that corporate social responsibility is theoretically no more effective than public intervention in environmental protection: companies can be encouraged to commit themselves to protecting the environment under restrictive conditions, but this does not eliminate the essential importance of public intervention. Analysis of the assumptions of neoclassical models shows that, in reality, they do not take into account all the properties of a public good, i.e., all the properties of the climate and the environment. Finally, the conditions for implementing CSR are incompatible with maximizing collective well-being, which explains why public intervention is theoretically preferable to CSR.

Keywords: Environmental efficiency; Externality costs of identity preservation; private production; Public good; state intervention; welfare (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-env and nep-hpe
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Published in Environmental Economics, 2024, 15 (2), pp.1-11. ⟨10.21511/ee.15(2).2024.01⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04630926

DOI: 10.21511/ee.15(2).2024.01

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