Review of Environmental Economics and Policy Advance Access published online on July 11, 2008
Review of Environmental Economics and Policy, doi:10.1093/reep/ren004
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Corporate Social Responsibility and the Environment: A Theoretical Perspective
* Director, Erb Institute for Global Sustainable Enterprise, and Dow Professor of Sustainable Science, Technology and Commerce, Ross School of Business and School of Natural Resources and Environment, University of Michigan, Ann Arbor, MI 48109, E-mail: tplyon{at}umich.edu
** Academic Director, Lawrence National Center for Policy and Management and Professor of Global Environment of Business, Richard Ivey School of Business, The University of Western Ontario, London, ON, N6A 3K7, E-mail: jmaxwell{at}ivey.uwo.ca
This article surveys the growing theoretical literature on the motives for and welfare effects of environmental corporate social responsibility (CSR). We show how both market and nonmarket forces are making environmental CSR profitable, and also discuss altruistic CSR. In particular, nongovernmental organizations strongly influence CSR activities, through both public and private politics. CSR can have varied effects, from attracting green consumers or investors, to preempting government regulation, to encouraging regulation that burdens rivals. Welfare effects of CSR are subtle, and there is no guarantee that CSR enhances social welfare. We identify numerous areas in which additional theoretical work is needed.
JEL Classification: Q58, D21