Support for “Fritt Ukraina”
Fritt Ukraina is a Norwegian organization that supports Ukraina in the war against Russia. The organization raises funds and organizes shipments of equipment to Ukraine. The organization is run by the founder, member of parliament Peter Frølich (conservative party), his brother, and several business people.
So far they have raised more than 130 million NOK. Several companies have donated to the organization. Some of the companies that have donated are listed on the webpage, while others have chosen to remain anonymous.
Sources: Newspaper article in DN, frittukraina.no
Sustainability because it is regulated
The behaviour of firms is heavily influenced by laws and regulations of many different types coming from many different levels in society. Many of these regulations directly or indirectly shape how sustainable a firm is. Pollution permits, fishing quotas, and CO2 emission taxes are obvious examples in the environmental domain. Human rights laws, gender quotas and anti-discrimination laws influence a firm’s social sustainability.
Some recent laws also directly or indirectly try to influence corporate sustainability more generally. The EU has for instance introduced several new regulations:
- The Corporate Sustainability Due Diligence Directive requires very large companies to do due diligence in their own operations and in their supply chain to identify and address human rights problems and the environmental impacts of their activities. The companies are also required to have a plan to limit their carbon emissions in line with the 1,5 degrees maximum increase from the Paris agreement.
- The Corporate Sustainability Reporting Directive requires large companies to report on their social and environmental performance and processes.
- The Green Claims Directive requires sustainability claims from businesses to be substantiated and science-based, and sustainability labels used to be public or publicly approved.
The Transparency Act (Åpenhetsloven)
The Norwegian Transparency Act was introduced in 2022. Companies above a certain size (2 out of 3: Sales more than 70 mnok, balance more than 35 mnok, more than 50 employees) must do due diligence in their supply chains to discover human rights and decent work problems, implement measures to rectify such problems, implement these processes in their operations, and inform about their work on these issues. They have to publish an annual report about their due diligence work, findings, and measures taken. Consumers have the right to get information about the company’s results or efforts (also regarding a specific product) if they contact the company.
Has the law led to any changes? Some businesspeople feel that the intentions were good but that the law mainly has led to more documentation and paperwork, but that it will lead to few actual changes in the field. Some companies say that the law has led to more attention on human rights internally. The effects of the laws are now being evaluated by researchers and by a consultancy, and the law may be adjusted following this evaluation.
While laws and regulations influence firms, firms have considerable leeway on how to deal with laws and regulations. In many cases rules are very general or/and monitoring is lax, meaning that the company has room to decide how much they want to follow the rules. Also, firms shape laws and regulation through lobbying and other types of political actions.
Sustainability to get legitimacy
Companies are not only concerned with making profits, it is also important for them to be seen as good and deserving members of society. All companies need legitimacy, which is “a generalised perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995, p. 574).
To get legitimacy, companies act in ways that do not necessarily increase profits directly, but that makes them look good or acceptable. Since society and groups in society expect companies to act on matters of sustainability, companies then must do this. However, sustainability initiatives can be both substantive (actually have an effect) or symbolic (looks good, but has no clear effect) (Delmas & Montes-Sancho 2010).
Sustainability because of outside pressures
Different stakeholders can put pressure on the company to become more sustainable
- Customers may require companies to improve their sustainability practices. This is especially the case for large corporate buyers or public procurers, who can hold considerable power over suppliers. Individual customers may have less direct power, but can buy more ethical products (or boycott buying), and may join activist groups and raise their voice on social media
- NGOs and media may put the spotlight on unsustainable behaviours and uncover scandals and poor performance. The company may therefore choose to engage in more sustainable practices.
- Shareholders may invest in sustainable companies and divest from unsustainable ones. They may also try to influence the company through voting at shareholder meetings.
- Employees may choose sustainable companies and avoid unsustainable ones. On the job they may try to influence the company from the inside by raising their voice on sustainability issues or letting sustainability influence decisions
Many of these pressures are also related to financial results (scandals uncovered by the media may for instance reduce the share price, stable & competent employees give profitability over time etc), but not always.
References
Delmas, M. A., & Montes-Sancho, M. J. (2010). Voluntary agreements to improve environmental quality: Symbolic and substantive cooperation. Strategic Management Journal, 31(6), 575–601. https://doi.org/10.1002/smj.826
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571–610.