Corporate and Social Responsibility

This chapter addresses corporate and social responsibility for environmentally conscious manufacturing and product recovery (ECMPRO). Environmentally conscious manufacturing (ECM) produces the same quantity and quality of physical (manufactured) output at lower physical resource consumption and lower generation of physical waste and pollution. Product recovery (PRO) is recycling of product for a more fully integrated manufacturing system including extended producer responsibility (EPR), or product stewardship. The chapter provides a framework for discussing the allocation of responsibility among key participants affecting ECMPRO. Corporate responsibility comprises the firm, its internal stakeholders (executives, directors, and employees) and investors, and its upstream suppliers (vendors). Social responsibility comprises downstream external stakeholders (especially customers and affected communities), governments functioning as regulators, and nongovernmental organizations (NGOs) functioning as activists. Effective collaborative governance aligning these key participants as beneficial stakeholders in the governance process and outcomes can improve ECMPRO. Primary responsibility for fostering and implementing ECMPRO is corporate, because firms generate environmental harms and can implement ECMPRO; social responsibility is desirably secondary. Firms should find the combination of cost-reducing eco-efficiency and competitive advantage enhancing environmental strategy financially attractive. Downstream external stakeholders, governments, and NGOs can influence this internal rationality. External expectations and internal rationality are complements in shared governance when firms assume ECMPRO responsibility voluntarily; internal rationality and external pressure are substitutes in shared governance when firms decline voluntary ECMPRO responsibility.