Events & Media



"Net Green: The Impact of Corporate Social Responsibility
on the Natural Environment and Employee Satisfaction"

Trevor Zink
PhD Candidate
Bren School of Environmental Science & Management

Tuesday, June 10, 2014
10:00 a.m.
Bren Hall 1414

Roland Geyer, faculty advisor
Sangwon Suh (Bren School) and Richard Startz (Economics), PhD committee members

Human activities continue to degrade the natural environment in myriad ways, and at the heart of the problem is industrial activity. Yet, opportunities exist to direct industrial activity in creative, strategic ways that will actively improve the natural environment and help restore it to a state that can sustain human and non-human life into the future. This dissertation is intended to be a step toward that future by progressing our understanding in three separate but related topics in the context of corporate social responsibility (CSR).

In the first chapter, I re-envision what is meant by "green" business. I propose a new definition for greenness, which states that it is the net balance of the environmental consequences caused by an activity that determines whether or not the activity is net green. To demonstrate the usefulness of the definition, I apply it to four case studies centered on pollution control and prevention activities, which seem prima facie green. Some of these activities turn out not to be net green after all; for others, the green intuition is correct, but with caveats.

The first chapter shows that one of the most important determinants of whether an activity improves or damages the environment is displaced production. The second chapter analyzes the displaced production mechanism and develops a methodology to measure displacement rate based on partial equilibrium modeling. First, I use a basic market model to reveal the price mechanisms of displacement and to identify key parameters affecting displacement rate. Results suggest that one-to-one displacement occurs only under specific parameter restrictions that are unlikely in a competitive commodity market. Next, the methodology is extended into an econometric model of the U.S. aluminum industry, which corroborates the basic model and suggests that U.S. aluminum displacement rates are likely to be below 100%.

The third chapter shifts focus from what a business can do to be sustainable to why a firm would want to be socially and environmentally sustainable. One possible explanation is that CSR may increase employee satisfaction, thereby increasing worker productivity and profitability. Yet, empirical evidence for the relationship between CSR and satisfaction is scarce. Using a novel dataset, I test this relationship for 3121 U.S. firms from 1998–2012 and find that companies’ performance in ten out of 44 CSR areas are most likely to affect employee satisfaction—six areas in which to improve (employee ownership plans, family benefits, gay and lesbian policies, charitable giving, conscientious labor rights, and product innovation) and four areas in which to reduce negative impacts (toxic emissions, workforce reductions, poor labor rights, and deceptive marketing).

This dissertation contributes to the literature in industrial ecology and life cycle assessment by clarifying the displacement mechanism and suggesting improved ways to estimate displacement rate, as well as to the business strategy and the environment literature by crystallizing what is meant by green business and furthering our understanding of how CSR can increase firms’ economic success.