Case Study: Exploratory Assessment of Sustainability Capability of Textile and Apparel Corporations in China
This study explores the highly polluting and resource and labor-intensive features of the textile and apparel industry. It reveals four key areas or goals in corporate sustainability: environmental protection, labor relations, operation improvement, and public welfare involvement. Only 22% of Chinese textile and apparel corporations can be considered "Truly Sustainable Corporations", leaving ample opportunity for improvement.
What moral responsibility do corporations have when producing goods? What factors determine the degree to which a corporation takes on social and environmental responsibilities? What factors would account for lack of consistent, long-term commitment to sustainability by a company?
Literature review
Corporate commitment to responsibilities
Regarding the responsibilities for which companies should take, Friedman contended that businesses are responsible to maximize returns to their shareholders while conforming to the law and ethical customs. Twenty years later, in view of rising concerns about and attention to corporate unethical behavior, Carroll proposed "Pyramid of Corporate Social Responsibility", identifying four types of responsibilities a corporation has: economic responsibility to be profitable, legal responsibility to obey laws, ethical responsibility to do what is right, even if not legally mandated, and philanthropic responsibility to contribute to communities and improve quality of life. Economic responsibility, being viewed as the first and foremost responsibility, is the foundation of the pyramid. Philanthropic responsibility, being considered as discretionary, is placed in the top tier of the pyramid. Carroll placed legal and ethical responsibilities in the second and third tiers respectively.
This identification and distribution of responsibilities is epitomized by the real business world - corporations are more likely to prioritize financial performance over other responsibilities. Based on a study of five major Australian corporations from 2005 to 2015, Wright and Nyberg found that companies tend to reduce their sustainability pursuits and reinvigorate their commitment to maximizing stakeholder financial value when they experience leadership changes or face financial reversals or criticism from stakeholders or media. That demonstrates the tensions between the pursuit of profit and corporate commitments to social and environmental responsibility.