When Corporate Social Responsibility Goes Bad: Greenwashing and Ethical Business Practices

Why Corporate Social Responsibility (CSR) Matters

Corporate Social Responsibility has never been more relevant. Companies accused of greenwashing risk not only public backlash but also revenue decline. Younger generations—Millennials and Gen Z—demand businesses contribute to a sustainable future while being ethical and transparent.

According to a McKinsey survey, 70% of respondents try to purchase products from ethical companies, while 65% check the origins and sustainability of what they buy. This trend impacts organizations by:

• Increasing sales by meeting ethical consumer demands.
• Attracting, motivating, and retaining talent interested in working for businesses with a real social impact.
• Reducing operational costs through sustainable strategies, such as IoT deployment in Barcelona, which saved €49 million in water costs.

What Is Corporate Social Responsibility (CSR)?

CSR is not new. The term was coined in 1953 by economist Howard Bowen. Today, UNIDO defines CSR as:

“A management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.”

CSR initiatives focus on generating positive societal and environmental impact while increasing profitability, typically across three areas:

1. Philanthropy and Volunteering

Philanthropic CSR includes donating money to empower disadvantaged communities, e.g., the Oprah Winfrey Charitable Organization has donated $400 million globally since 2010.

Volunteering programs, like EY Connect Day, enable employees to contribute time, teach entrepreneurial skills, and promote sustainability. Benefits include:

• Empowered communities
• Engaged and motivated employees
• Enhanced corporate reputation

2. Ethical Labor Practices

Modern CSR goes beyond occasional philanthropy. Companies are expected to foster safe, diverse, and inclusive workplaces, with transparent reporting on diversity and inclusion initiatives. Leading companies like Slack and Microsoft publish workforce diversity reports, which:

• Hold companies accountable
• Drive innovation (companies with high diversity report 19% higher innovation revenue)
• Create new roles, e.g., workplace diversity experts (64% growth in 2020)

3. Environmental Responsibility

Fighting climate change is a top concern. According to a UN Development Program survey, two-thirds of people see climate change as a global emergency, especially younger generations.

Companies such as IBM, Hootsuite, and Benetton have integrated environmental responsibility into their core values. Sustainability is now central to consumer and employee trust.

When CSR Goes Bad: Greenwashing

Greenwashing occurs when companies misrepresent their sustainability efforts, prioritizing image over real impact. Examples include:

• Shell (2008): labeled a refinery as “sustainable”
• BMW (2017): claimed “zero emissions” in ads
• Ryanair (2020): used outdated environmental claims
• Walmart (2017): paid $1 million to settle misleading green claims

Short-term marketing gains can lead to long-term backlash and loss of credibility.

Beyond Greenwashing: Pinkwashing and Ethical Misrepresentation

Companies may also exaggerate inclusivity or social initiatives (pinkwashing), e.g., Pepsi’s controversial ad using the Black Lives Matter movement. Authenticity and measurable results are critical.

Tips to Implement CSR Successfully

• Be Honest – Communicate transparently and avoid exaggeration.
• Measure Your Impact – Track social and environmental results, and report publicly to build trust.
• Learn from Others – Adopt best practices from leading CSR-focused companies like Patagonia, which combines transparency, sustainability, and profitability.

Patagonia’s approach:

• Publishes detailed supply chain and sustainability reports
• Participates in certifications: Fair Trade, Fair Labor Association, Regenerative Organic Certified™
• Aligns business success with environmental and social impact, generating over $1B in annual sales

How BEBS Prepares Future Ethical Leaders

At Barcelona Executive Business School (BEBS), our MBA programs in Supply Chain & Logistics and Tourism & Hospitality have been updated with AI and sustainability modules to train the next generation of ethical business leaders. Students learn to:

• Integrate CSR and sustainability into business strategy
• Apply AI for sustainable supply chain and tourism solutions
• Balance profitability with social and environmental responsibility

By combining real-world business skills with social impact knowledge, BEBS graduates are prepared to lead ethical organizations that avoid greenwashing and make tangible societal contributions.

Towards a Sustainable Future

The key takeaway from When Corporate Social Responsibility Goes Bad: Greenwashing is clear: companies must act authentically. Consumers and employees can demand transparency, measurable impact, and long-term sustainability.

Learn more about business with social impact in our upcoming e-book: What is Social Responsibility in Business and Why You Should Care About It.