Corporate Social Responsibility and Intellectual Property in the recent EU context

1.    Introduction

Is there a potential connection between sustainability and intellectual property? In contemporary society, there is a growing recognition of the significant impact that human and corporate behaviors have on climate change. This rise in awareness underscores the importance of robust Corporate Social Responsibility (CSR) and sustainable practices (Degroot, et al., 2021). As global market dynamics evolve and regulatory frameworks become more stringent, the demand for corporations to adopt comprehensive CSR strategies is becoming increasingly critical, and the need to create green inventions is crucial.

The CSR awareness not only addresses environmental concerns but also enhances corporate reputation and stakeholder trust, ultimately contributing to long-term business viability in a changing landscape (Idowu, et al, 2013). In the same way, based on the EU’s Global Energy and Climate Outlook (2023), companies are increasingly investing in research and development (R&D) to create green innovations and technological advancements that produce new products and services aligned with sustainability goals.

While sustainability and social responsibility are themes gaining significant attention in institutions and academia, they are rarely discussed in the context of intellectual property (IP). Haugen (2021) noted that the term ’IP’ does not appear in the Sustainable Development Goals (SDGs). Despite this lack of explicit connection, IP plays a relevant role in advancing both corporate responsibility and global sustainability objectives.

This article analyzes the relationship between CSR and IP in the context of green innovations, particularly in light of recent EU directives that address sustainability. The study seeks to evaluate this relationship’s current state and legislation’s impact in this area, and to answer: How does CSR relate to IP and green innovations, and what role do EU directives play in this context?

The structure of the article is as follows. The first Section presents a theoretical background about the main concepts of this article (CSSR, the EU directive, IPRs and sustainable innovations). Having set some clarity about the terms, the following section analyzes the relation between CSR and IP based on literature publications and data review. The third section focuses on how the EU directives interact with the development of this area. Finalized with concluding remarks and a critical assessment.

2.    The terms, norms and development

CSR, sustainability and IPRs are concepts that are constantly evolving. This section will provide a review of the fundamental concepts and developments pertinent to drawing connections between them.

2.1 Sustainability and Corporate Social Responsibility

For the purpose of this article, the term CSR will be used in a broad sense, including social and sustainability aspects of undertakings in a global market. In particular, sustainability is a recurrent concept that has been discussed broadly and gained more attention from organizations, nations and companies.

There is no unique definition for sustainability, yet there is a consensus in the contemporary policy landscape to define it according to the Brundtland (1987) ’Our Common Future,’ report as “the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs”. This foundational concept has been a cornerstone of both UN and EU policy frameworks. The UN’s 2030 Agenda for Sustainable Development, encapsulated in the 17 Sustainable Development Goals (SDGs), encompasses the three pillars of sustainability: economic, social, and environmental.

The EU, aligning with the UN’s vision, has integrated sustainability into its core policy initiatives, most notably through the European Green Deal (2021). This transformative strategy aims to achieve a climate-neutral Europe by 2050, emphasizing a systemic transition to a sustainable economy. The EU’s approach extends beyond environmental concerns, incorporating social and governance dimensions through directives like the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), (and its possible modifications with the Omnibus I). Thus, within these frameworks, sustainability is not merely an environmental imperative but a rounded principle aiming for long-term well-being and resilience, with binding obligations.

The term ‘CSR’ is considered a method for companies to interact, connect with, and steer their actions to align more closely with societal values and interests; its substance is highly context-dependent, and changes based on time and location, being consistent with specific goals of society (Dunning, 2008). Furthermore, the OCED defines it as a holistic and dynamic term regarding business contribution to sustainable development responding to societal and environmental concerns, creating a triple bottom line for undertakings: to advance economically, and at the same time being environmentally and socially responsible. This organization presents a yearly report about Global Corporate Sustainability (2024), highlighting market capitalization, reporting and investment.

In recent years, the concept of ‘Environmental, Social, and Governance’ (ESG) has gained significant attention. According to the EU Commission the ESG framework consists of criteria for evaluating the sustainability and ethical implications of a company or investment, concentrating on those three key areas. While the term ESG is primarily linked to investing, it is also relevant to all stakeholders involved in a company’s operations. For the purpose of this article, ESG will be considered under the broader umbrella of CSR, as it represents a fundamental aspect of CSR practices in Europe.

In the EU context, CSR transcends voluntary action (as it is normally considered something that some companies decide of their own accord to do), evolving into a mandated obligation for enterprises to account for their societal and environmental impacts German Ministry of Labour and Social Affairs (CSR). Driven by the European Green Deal, the CSRD and CSDDD, this concept is defined as the responsibility of enterprises for their impact on society by an integration of ESG factors into core business strategies, coupled with rigorous due diligence across value chains. This framework emphasizes accountability, transparency, and a proactive contribution to sustainable development, reflecting a shift towards a climate-neutral and equitable economy. EU Commission (MEMO/11/730).

2.2 Intellectual Property, Innovation, and Sustainability

Different theories and values support IP as a concept, and one of the main arguments for its existence is the encouragement of innovation and promoting investment in new technologies that move societies forward. IPRs typically stimulate innovation through the incentives they create and act as a mechanism for companies to safeguard their assets in a manner responsive to contemporary requirements. (Do Stronger Intellectual Property Rights Increase Innovation?).

IPRs protect intangible assets that are essential for bolstering corporate business models and achieving strategic value creation goals. In an economy increasingly focused on services and technology, ownership of IPRs has become crucial for promoting innovation and encouraging investment in R&D. This shift provides incentives for companies to create novel solutions to current problems. (IPR-intensive industries – EPO & EUIPO)

By merging the incentives for creation with the current necessity to combat the human impact on climate change, the concept of ‘green or sustainable innovations’, according to the Encyclopedia of Creativity, Invention, Innovation and Entrepreneurship (2017), has emerged, and it is used to refer to creations that contribute to sustainable environmental development. This initiative is resulting in approaches where innovation aligns with societal objectives, takes sustainable development as a priority, creates products for environmental protection, or enhances management techniques to ensure that products and services fulfill human needs while minimizing environmental harm, thereby ensuring the ongoing operation of businesses. (Liao, et. al, 2022).

As articulated within the mentioned EU’s policy framework, green innovation is a critical driver for transitioning to a climate-neutral and circular economy. On the one hand, the European Commission’s focus on ’eco-innovation’ emphasizes innovations that reduce environmental impacts and enhance resource efficiency, as tracked by the Eco-innovation Index. On the other hand, the OECD (2023) highlights the role of green technology and innovation in achieving environmental goals and transitioning from carbon and material-intensive economies to low-carbon and resource-efficient economies.

3.    Are CSR and IP correlated?

These two concepts are typically treated as separate. IP is often overlooked in discussions about sustainable development and CSR. Nevertheless, despite the lack of direct references, there are some studies regarding the intersection between these two fields and how they can contribute to one another. These are some of the research (some collecting empirical data) that prove and illustrate this relation:

Discussing socially responsible IP, Brown (2005) studies the balance between the IPRs and public benefits, under the context of CSR in the first decade of this century, setting lessons for the future. This research suggests that human rights should play a pivotal role in the future of IP for more accessible sharing of technology. This suggests more philanthropy and development of CSR in the IP world (mainly controlled by large enterprises)leaning towards “a more creative, less property-based approach to IP, in appropriate circumstances”. As part of CSR, the author proposes a voluntary approach where companies (IP owners), based on ‘benevolence’ or ‘self-interest’, would facilitate the sharing of technologies for public benefit. This research demonstrates the perception of the beginning of this century in which CSR was more voluntary and good faith acting.

In a research about Socially Responsible Corporate IP, OseiTutu (2018) defends that IP promote both progress and social aspects simultaneously. By “promoting business interests and efficiency, trade-related IP should promote human progress, which could be encouraged through socially responsible corporate practices”. The study suggests a CSR model for IP and how it can be an effective short-term strategy, where companies play a role as ‘good global citizens’ by the exercise of the IPRs in a socially responsible manner, and with their change of behavior, they could fill gaps of the legal regime. This research already introduces some aspects of the interests of companies and the tendencies of the market towards more sustainable actions.

In a recent study about developing a sustainable paradigm to integrate IP and CSR, Orozco (2024) illustrates how innovations also have a greater well-being aspect for society. It is developed how ethical implications play a role in the use of inventions, “intellectual property may generate social harm due to the incentives provided to generate antisocial innovations”. The study asserts that fiduciary leaders have a duty to embrace, with good faith, open innovation (to be open to internal and external sources) as a standard practice or managerial strategy to achieve optimal CSR outcomes for the firm and its stakeholders. By integrating this paradigm shift, the research acknowledges the inherent challenges, yet it highlights that companies have successfully integrated CSR into various domains, suggesting that a similar approach can be effectively implemented in the IP area as well.

In one quantitative research on the relationship between green innovation and corporate sustainability, Liao, et al (2022) using data from China’s National Intellectual Property Administration, this relationship was tested based on the results. Focusing on Chinese A-share listed companies from 2010 to 2018, the study empirically examined the extent to which green innovation influences sustainable corporate development. The findings indicate that green innovation output significantly enhances a company’s sustainable growth potential, demonstrating a substantial economic impact. Moreover, this study highlights a distinction between different types of green patents in China, revealing that only invention patents (referring to new products’ manufacturing and application method) contribute meaningfully to corporate sustainability, whereas non-invention patents (utility model patents and appearance design patents) have no significant effect. By offering these insights, the research provides a novel perspective on the determinants of corporate sustainable development, confirming the belief that green innovation promotes market share and improves reputation, production processes and utilization of resources, all of which reflect on sustainable development.

4.    Analysis of the relation in the light of EU directives

Now that it has been illustrated how these two concepts can be related, it is crucial to evaluate how this is being applied in EU norms. The European Green Deal sets the policy initiatives by the Commission for achieving the goal of being climate-neutral, trying to impact all sectors and shift towards a sustainable economy.  Several programs and norms aim to achieve this objective, like the project Horizon Europe, a plan that acknowledges the role of research and innovation in accelerating transitions, demonstrating solutions, and ultimately driving systemic changes for a cleaner, greener, and fairer society.

Regarding specific CSR directives, on the one hand, CSRD introduced a relevant step towards a more unified and structured reporting framework of ESG and sustainability risk impacts for companies, increasing transparency and accountability. On the other hand, the CSDDD obliges companies to perform due diligence on their value chains regarding human rights and environmental impacts. Promoting sustainable and responsible practices throughout the supply chain and the relation with suppliers and stakeholders.

It should also be noted that, in an attempt to simplify requirements, the EU commission (2025), relying on the Innovation Principle, presented a proposal for sustainability compliance in just one body. With the Omni Bus proposal, the EU takes into account the recommendations of the report on ‘The Future of European Competitiveness’ to “create a regulatory landscape which facilitates competitiveness and resilience” by reducing the compliance costs for companies. Despite the innovation aim, there is no reference to IP in the proposal.

These directives focus on reporting, yet the effects on innovation are indirect. It can be assumed that by requiring companies to disclose their sustainability performance, pressure is created to improve their practices, thus driving towards more sustainable innovation. There is no direct connection or reference to IP (besides mentioning in the recitals that companies should not disclose IP or trade secrets), but the innovations derived from the existence of the directives can be protected by IP laws. Furthermore, the awareness of sustainability can be seen as a policy mobilizer that is a cornerstone for sustainability solutions, as presented by Ørstavik (2021) “The positive effect on innovation is stronger if environmental policies are stringent and not differentiated”.

5.     Conclusion

Some of the EU norms mentioned impose obligations for reporting activities related to CSR; nonetheless, there is no direct reference to IP (nor in the UN goals or commitments). Nevertheless, the studies quoted can lead to the conclusion that CSR can support IP challenges by adopting practices that benefit public sustainability goals across the three ESG dimensions. This includes promoting green inventions and sustainable solutions, as well as the dissemination of advancements aimed at addressing global challenges and SDGs.

The correlation illustrated in this article highlights how these two concepts can come together when addressing the exercise and management (not the existence) of the IPRs coherently with the needs of society, making a paradigm shift in the industry. This makes the discussion not centered on the legal aspect but refers to which values guide the actions of undertakings, where CSR has a role in filling the gaps of legislation and policies towards a more sustainable future.

Regarding the socially responsible IP approach, some companies, such as Tesla and Toyota (The “Good Faith” of Tesla, 2025) , have relied on a CSR strategy to create patent pledges for electric vehicles and hydrogen cars, respectively, without signifying a mere altruistic move (LA Times). There are also companies aiming to have totally sustainable R&D and a green patent portfolio to increase the number of sustainable inventions (Cleantech – SNS). Also, financing actors are considering this more in their reporting and metrics to see where the money is going and calculating the lending impact (NIB).

All in all, this article drew the connection between CSR and IP, demonstrating how the corporation’s behavior is a way of changing the current state of affairs and promoting green innovations. In addition to CSR, binding regulations and policy changes should be achieved. The studied norms of the EU are significant in institutionalizing CSR. Even though there is no direct reference to IP, this awareness could lead to companies extending their ESG to their inventions that could benefit public goals, having a responsible management of their IP portfolio, and the development of green innovations. These actions will not just be driven by altruism (and the urgency of climate change), but also by market tendencies and the importance of CSR in the reputation of companies.

 

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Main photo: Istock / Anon Pitipong