Strategic CSR - Scope 4 emissions

The article in the url below caught my attention due to its focus on scope 4 greenhouse gas emissions – a term that the author saw used recently by PG&E. I was familiar with scope 1, 2, and 3, but had not heard scope 4 before:

"Scope 1 and 2 were rigorously defined back in 2001 under the Greenhouse Gas Protocol, the established resource for emissions accounting developed by the World Resources Institute and the World Business Council for Sustainable Development. Scope 3, the most complicated one, came in 2011. The trio of terms was designed to capture the full sweep of a company's climate footprint, according to WRI climate expert Pankaj Bhatia. This includes the direct emissions tied to a company's activities (Scope 1), as well as the indirect emissions from a company's energy use linked to making its product or delivering its services (Scope 2). It even includes pretty much any other indirect source of emissions associated with a company's value chain (Scope 3)."

So, is scope 4 a real thing or did PG&E make it up?

 

"Bhatia provided a decisive answer to the second question: No, officially they are not an established category under the Greenhouse Gas Protocol. And Bhatia would know because he's the program's director and has been tracking these conversations for decades. The fact that PG&E recently used this terminology was news to Bhatia and others interviewed for this article."

 

It seems that PG&E is using the term in order to convey positive progress, rather than simply cataloging all the negative emissions for which the firm is responsible: 

 

"PG&E doesn't dispute the term's unofficial nature. Spokesperson Lynsey Paulo wrote in an email that in the recent report, 'we acknowledge that 'Scope 4' is 'an emerging term for categorizing emission reductions enabled by a company' and present the term in quotations to distinguish it from Scope 1, 2, and 3 greenhouse gas emissions.' She went on: 'As a utility that provides gas and electric service to millions of Californians, we have dedicated programs and strategies to enable our customers to reduce their carbon footprint and our 'Scope 4' goals quantify our 2030 objectives.' For example, by providing energy efficiency and electrification programs, the company said they can help customers save 48 million metric tons of carbon-dioxide equivalent by 2030. And by promoting and supporting the uptake of electric vehicles in the utility's service area across California, the utility said it can save customers more than 58 million metric tons of CO₂ equivalent by the decade's end."

 

So, in essence:

 

"PG&E seems to be using 'Scope 4' as synonymous with what others more commonly refer to as 'avoided emissions,' said Laura Draucker, Ceres' director of corporate greenhouse gas emissions. This isn't the first time this has happened, but it's not common or widely accepted."

While this may be fine, due to the ambiguous nature of this term (which has not been officially defined) and the temptation firms have to emphasize positive over negative news, the potential is for 'scope 4 emissions' to be used as greenwash:

"To be sure, PG&E is tackling its greenhouse gas footprint. In the report, the company outlined its target to be a net-zero energy system in 2040, five years ahead of California's similar climate goal. The company has also pledged to cut its Scope 1 and 2 goals by 50 percent from 2015 levels by the end of the decade, and to cut Scope 3 emissions by 25 percent from 2015 levels in that same time period. Still, the report didn't offer a formula or detailed data behind PG&E's 'Scope 4' figures, making it hard to understand what's fully counted as avoided emissions or how to compare that to any other companies that may follow its lead. If companies do follow PG&E, Bhatia advises that they don't adopt the 'Scope 4' label and find something else instead."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

PG&E Wants to Add 'Scope 4' Emissions to Your Climate Dictionary

By Zahara Hirji

June 19, 2022

Bloomberg Businessweek

https://www.bloomberg.com/news/articles/2022-06-20/what-are-scope-1-2-and-3-emissions-not-enough-for-utility-pg-e

 

Strategic CSR - DAOs

The idea featured in the article in the url below is interesting:

"There's a new shop coming to San Francisco's Hayes Valley, but it's not your traditional brick-and-mortar establishment. The DeStore 'STORE_0' will be collectively owned and operated by members of a so-called decentralized autonomous organization [DAO]. That is, anyone will be able to buy a blockchain-based crypto token that represents ownership in the store, and vote on what it buys and sells. The greater the value of the token, the greater the owner's voting power."

 

Specifically:

 

"Co-founder and CEO Itsuki Daito sees the store as a way to not only revive retail post-pandemic, but also to create a community space, where owners — half of whom will be locals and the other half from around the world — would have to agree on how to spend profits. While there may be a downside of having too many people in charge, one investor [reacts] that's just more 'wisdom of the crowd.' Will there be buy-in?"

This issue of 'buy-in' of course always applies to new ideas (and particularly new technologies). What I find fascinating, instead, is the underlying community-based structure to decision making and, in this particular case, engaged commitment to a for-profit organization:

"Daito's pitch goes like this: when the DeStore app is launched this fall, anyone will be able to buy a blockchain-based token that represents ownership in the store, and join the community's server on Discord, a chat app similar to Slack that includes many elements of more traditional social media platforms. The greater the value of the tokens participants own, the greater their share of voting power. As the store gets up and running, token holders will be able to vote on what brands to stock and sell at the location, what furniture to buy, and even who will work there. What happens to any revenue the store may generate will also be up to a vote."

Buy-in from the local part of that community, is clearly essential:

"A big test of this idea will be whether people actually want to spend their free time running a store in Hayes Valley, or have the expertise to do so successfully. Ideally, Daito says, 200 people will be part of the DAO. … Part-owners can choose to staff the store themselves, or hire outside employees, or even conscript Daito himself to operate the register."

The idea was partly motivated by those who predict the downfall of retail in the aftermath of the COVID-19 pandemic:

"Within the wreckage, Daito sees opportunity. 'During the pandemic, online shopping is getting bigger, of course. But offline shopping is getting bigger as well, if they provide offline-only value,' he said. 'Like a community experience; like a touch-and-feel experience.'"

What also makes the experiment interesting, though, is how the investors will chose to utilize any profits generated:

"Still, there's no clear return on investment from the store itself, given the fact that owners will have to agree on whether to divide up profits amongst the DAO or put the money back into new products. It's a gamble partners in a traditional LLC — or part-owners in a small business — make all the time, according to Parrott. In a DAO, there are just a lot more cooks in the kitchen. Or, as he puts it, more 'wisdom of the crowd' to go around."

Either way, what is clear is that the potential for blockchain technology is only just becoming apparent and will present opportunities to reshape the business world.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

This Entrepreneur is Betting the Future of Retail Runs on the Blockchain and Discord

By Sarah Holder

August 9, 2022

Bloomberg CityLab

https://www.bloomberg.com/news/articles/2022-08-09/this-retail-entrepreneur-is-betting-on-the-blockchain-daos-and-discord

 

Strategic CSR - Energy

This graphic caught my eye as I was scrolling through LinkedIn:

The thing that immediately caught my eye is the large number of states that still rely heavily on coal. This should give everyone reason to question whether EVs (and electrification, in general) are an immediate solution to our climate-related problems. The second thing, though, was how many states now have some form of renewable energy producing the largest amount of electricity. The same article produces a breakdown of each energy source for North America, as a whole:

Source of Power  Percentage

Natural Gas           44.32

Coal                       20.8

Nuclear                  8.83

Wind                      8.62

Hydro                    8.37

Solar                      3.46

Oil                         3.14

Other                     2.46

Have a good weekend

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

The Largest Source of Power in Every State and Province

By Alex

November 27, 2022

Vivid Maps

https://vividmaps.com/largest-source-of-power-in-every-state-and-province/

 

Strategic CSR - Global trade

Since the 2022 passing of the Inflation Reduction Act (which contains large subsidies for environmentally-related products and industries), I have seen a lot of media coverage about trade friction between the U.S and EU. The green subsidies that favor U.S. companies, by definition, penalize those companies from elsewhere and, given that the EU is perhaps the most advanced economic region in promoting environmental awareness, the companies most affected tend to be European. Before the IRA, however, there was the Green Deal, which was passed by the EU in 2020. A key part of this legislation was the Carbon Border Adjustment Mechanism (CBAM), which is an attempt to account for carbon emissions in products made in countries that don't otherwise tax that externality. The article in the first url below covers the details of CBAM, which were announced at the end of last year and represent the first attempt to tax imports based on the carbon emitted during their production (see Strategic CSR – Global carbon tax):

"The European Union reached an agreement to impose a tax on imports based on the greenhouse gases emitted to make them, inserting climate-change regulation for the first time into the rules of global trade. The deal … ends more than a year of negotiations on the details of the plan. The EU is expected to adopt it in the coming weeks as part of a sweeping package of legislation that would step up the bloc's efforts to limit global warming."

The EU is understandably proud of taking the first step on this issue:

"The plan, known as the carbon border adjustment mechanism, would be the world's first tax on the carbon content of imported goods. It has rattled supply chains around the globe and angered the EU's trading partners, particularly in the developing world where manufacturers tend to emit relatively large amounts of carbon dioxide. It has also unsettled manufacturers in the U.S. who are concerned the measure would create a new web of red tape to export to Europe."

The reason for this concern in the U.S., as noted in the article in the second url below, is that this legislation is as much about economic policy as it is about concerns for the environment:

"The 'carbon border adjustment mechanism' is aimed at protecting E.U. companies subjected to strict environmental rules from the risk of being crushed by competition with businesses from countries whose rules on emissions are looser. It is also designed to encourage other countries to adopt similarly ambitious emissions rules."

Thus, for all the criticism that the IRA has received for being a protectionist trade measure, the U.S. can legitimately point out that the EU started it. The exchange of blame raises one of the most frustrating aspects of tackling climate change, which is that every time a policy is proposed or (heaven forbid) implemented, the reason most often cited for why it can't possibly work is that it causes some disadvantage for some group that relies on the carbon emissions that the policy is trying to eradicate. But, of course, that harm is being inflicted because that is the main point. Since we are clearly incapable of surrendering our reliance on carbon voluntarily, some coercion is required, which will lead to a period of transition that is going to be challenging because it is new. If we want to decrease the consumption of carbon, we need to make it more expensive, which means that a higher price cannot be the reason for not doing it. Why we cannot have an honest discussion about this as a society is beyond me. Whenever a cost increase is a result of a policy change, those with less economic power (and/or a higher dependence) are going to be disproportionately affected since they have, by definition, less money. But, since economic theory of supply and demand is the best means we have devised of allocating scarce and valuable resources, there is no way around this. If we increase the cost of emitting carbon, then consumption will decrease, but those that rely on carbon or who resist reducing their consumption, will pay more. And, of course, the longer we take to acknowledge this, the higher the cost of switching becomes.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

EU to Tax Impots Based on Emissions

By Matthew Dalton

December 14, 2022

The Wall Street Journal

Late Edition – Final

A1, A8

https://www.wsj.com/articles/europe-reaches-deal-on-landmark-carbon-import-tax-11670921011

New E.U. Tax Hits Countries Failing to Halt Gas Emissions

By Emma Bubola

December 14, 2022

The New York Times

Late Edition – Final

A12

https://www.nytimes.com/2022/12/13/world/europe/eu-carbon-tax-law-imports.html

 

Strategic CSR - COVID-19

The article in the url below discusses the effects of the COVID lockdown on carbon emissions and documents, somewhat depressingly (although perhaps not surprisingly), how quickly they have rebounded. What I find fascinating about the pandemic, however, when essentially the whole developed world shut down, is how little impact there was on total emissions (see red circle, below):

For reference as to how relentless is the year-on-year increase in carbon emissions (despite all efforts to raise awareness of the dangers), see Strategic CSR – Climate inaction. During COVID, yes, total emissions dropped from 33.5 billion tons down to about 31.5 billion tons, but the world still produced 31.5 billion tons (more than almost all years since 1950) when a large percentage of the developed world was locked in their houses. When we all felt like there was nowhere we could go, total carbon emissions dropped by only about 6 percent. And, to be clear, we need to get it to zero. I think it is when you frame the problem in such stark terms that you realize we are simply not talking or thinking about the challenge from a realistic perspective. The analogy of rearranging the deck chairs on the Titanic comes to mind.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Covid-19 Slashed Carbon Emissions. Now They're Climbing Again

By David Hodari

April 20, 2021

The Wall Street Journal

https://www.wsj.com/articles/covid-19-slashed-carbon-emissions-now-theyre-climbing-again-11618894980

 

Strategic CSR - Danone

Around the turn of the year, I saw several articles claiming how 2023 was going to be the year of social justice litigation – that activists will increase their use of the courts to compel the behavior they are seeking from companies. The article in the url below gives some credence to those claims – this time taking advantage of a recently passed law in France:

"Danone, the French dairy giant, is being taken to court by three environmental groups who say it has failed to reduce its plastic footprint sufficiently, in a lawsuit challenging corporate social responsibility in the face of the climate crisis."

Specifically:

"The groups accuse Danone — one of the world's top 10 plastic polluters, according to a recent study — of 'failing to live up to its duties' under a groundbreaking French law that requires large companies to address their environmental impact and has opened ways to sue them should they fail to do so."

The more aggressive tactics are being driven by impatience with the pace of change and a sense that time is running out:

"By suing Danone, ClientEarth and the two other groups, Surfrider Europe and Zero Waste France, are hoping to shed light on what many scientists say is a global plastic crisis whose potentially devastating effects have yet to be fully understood. … In 2015, [plastics] were responsible for 4.5 percent of global greenhouse gas emissions, one recent study found, more than all of the world's airplanes combined."

And, as I have noted before in prior newsletters, this is not a small problem, while Danone is far from an innocent contributor:

"Figures from the Organization for Economic Cooperation and Development show that, over the past seven decades, plastics production has soared from two million metric tons (there are about 2,200 pounds per metric ton) to more than 400 million — and is expected to almost triple by 2060. Danone alone used more than 750,000 metric tons of plastic — about 74 times the weight of the Eiffel Tower — in water bottles , yogurt containers and other packaging in 2021, according to its 2021 financial report."

Danone, perhaps unsurprisingly, claims to be making meaningful progress on reducing the level of waste for which their products are responsible:

"The company said that it reduced its plastic consumption by 12 percent from 2018 to 2021, and that it has committed to use only reusable, recyclable or compostable plastic packaging by 2025. But Danone is not on track to reach that target, according to a report by the Ellen MacArthur Foundation, which set up a voluntary program with the United Nations for big companies to address plastic pollution."

Nevertheless:

"Only 9 percent of all plastics ever made have been recycled, according to the United Nations, with most of the rest ending up in landfills and dumps."

The law that the activists are using to sue was passed in France in 2017:

"It requires large companies to take effective measures to identify and prevent human rights violations and environmental damages throughout their chain of activity. Impetus for the law came from the Rana Plaza disaster in 2013, in which the collapse of a clothing factory killed more than 1,100 people in Bangladesh. Labels from famous brands were found in the rubble, casting a harsh light on the garment industry and prompting politicians and rights groups around the world to press for more corporate responsibility. The French duty of vigilance law, the first of its kind in Europe, has since inspired similar legislation in Germany and the Netherlands, as well as a proposed European Union directive."

I'll be keeping my eyes open to see if this tendency towards litigation is a trend that will pick up pace this year, and beyond. While this is a substantive way in which stakeholders can hold firms to account, there is also the danger that the interests of the minority are prioritized over those of the majority, who might not support the action being pursued in court.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Danone Sued Over Its Plastic Use Under a Landmark Law

By Constant Meheut and Catherine Porter

January 10, 2023

The New York Times

Late Edition – Final

B3

https://www.nytimes.com/2023/01/09/world/europe/danone-sued-plastic-use-france.html

 

Strategic CSR - BRCC

The article in the url below checks-in on a company I have been following reasonably closely – Black Rifle Coffee Company (BRCC; see Strategic CSR – BRCC). The article makes the case that, although they may not be your values, BRCC is clearly a values-based business:

"You might call Black Rifle Coffee Co. a socially conscious enterprise. 'This is a veterans' corporation,' founder and CEO Evan Hafer, a former Green Beret, says in a Zoom interview. More than half of Black Rifle's employees have served in the military or are family of veterans. In 2021 the company put $5.3 million in shares toward starting the BRCC Fund, a charity dedicated to helping wounded or traumatized veterans and their families. That was on top of $1.2 million in charitable contributions and $3 million worth of coffee and related products to active-duty military and first responders."

In spite of BRCC's commercial success (revenues of "$233.1 million" in 2021), the firm has faced difficulty identifying more legitimate partners with which it can work:

"But Mr. Hafer says Black Rifle struggled to find banks and law firms to help it arrange an initial public offering. Since he founded the company in 2014, companies have told him that it was 'too irreverent' and poses 'reputational risk.'"

The ostracizing (perceived or real) has continued in terms of financial institutions:

"In 2019 and 2020, a Black Rifle spokeswoman says, company leaders were talking to Chase, Bank of America and Macquarie Group about raising capital. After initially showing interest, all three companies declined to work with Black Rifle, citing the company's image. In 2018 Black Rifle had tried to open an account at a Chase branch in San Antonio and had been turned away over reputational concerns. The spokeswoman says that Macquarie was particularly fixated on the name of its in-house magazine, Coffee or Die, which covers military issues and won the Military Reporters & Editors Association's 2022 journalism contest for overseas coverage."

The story is the same with law firms:

"Black Rifle hit similar roadblocks in 2019 and 2020 with Skadden Arps, Latham & Watkins and Simpson Thacher & Bartlett. All three law firms passed on working with the coffee company because of its image. According to the Black Rifle spokeswoman, Latham & Watkins said that its reputational risk committee thought no one from top law schools would be willing to work at the firm if it took on Black Rifle as a client, especially because its name included the word 'rifle.' The name 'is an homage to the service rifle,' Mr. Hafer says. Like the guns he taught special-operations soldiers to shoot, he says, coffee is 'lifesaving equipment.'"

BRCC's founder and CEO, Hafer, extrapolates this exclusion to suggest it is indicative of the reaction all veterans face in seeking to engage with these normal elements of society. What I find interesting is that these banks and law firms would not doubt have no hesitation engaging with oil firms. So, why is it that a genuinely values-based business that is seeking to represent a population that society says it reveres (veterans) is excluded, when oil firms (which, by any measure have produced many times more harm than BRCC) are not shunned in the same way? The article suggests BRCC is being ostracized due to political correctness, but that seems less compelling if oil and gas firms are fine. Or, is perceived social and political 'harm' treated in a different way to environmental harm (which is much more damaging from a longer term perspective)?

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

A Socially Conscious but Politically Incorrect Company

By Megan Keller

September 16, 2022

The Wall Street Journal

Late Edition – Final

A15

https://www.wsj.com/articles/a-socially-conscious-but-politically-incorrect-company-black-rifle-coffee-initial-public-offering-finance-law-firms-reputational-risk-military-veterans-evan-hafer-11663258552

Strategic CSR - Plastic bags

The article in the url below shows how difficult it can be to shape human behavior, particularly when the goal is to limit waste:

"Nicole Kramaritsch of Roxbury, N.J., has 46 bags just sitting in her garage. Brian Otto has 101 of them, so many that he's considering sewing them into blackout curtains for his baby's bedroom. … Lili Mannuzza in Whippany has 74."

The bags have resulted from a strict law that was passed in NJ, which banned the use of paper and plastic bags in state stores and supermarkets:

"[The law] went into effect in May [2022] and prohibits not only plastic bags but paper bags as well. The well-intentioned law seeks to cut down on waste and single-use plastics, but for many people who rely on grocery delivery and curbside pickup services their orders now come in heavy-duty reusable shopping bags — lots and lots of them, week after week."

The law is extensive and, many would argue, is exactly what is needed in an effort to reduce the amount of waste our economy generates:

"While nearly a dozen states nationwide have implemented restrictions on single-use plastic bags, New Jersey is the only one to ban paper bags because of their environmental impact. The law also bans polystyrene foam food containers and cups, and restricts restaurants from handing out plastic straws unless they're requested."

But, the unintended consequences forced delivery companies to deliver using reusable bags, which are then accumulated by those who buy a lot of take-out, as indicated by the photo accompanying the article:

 

To state the obvious:

"Compared to single-use plastics, the more durable reusable bags are better for the environment only if they are actually reused. According to [research] … a typical reusable bag, manufactured from polypropylene, must be used at least 10 times to account for the additional energy and material required to make it. For cotton totes, that number is much higher."

While such laws may well end up reducing single-use bag usage for customers who go to the store, it clearly has had a very different impact for those who order online:

"'There's clearly a hiccup on this,' said Bob Smith, a New Jersey state senator and co-sponsor of the bill, 'and we're going to solve it.' Mr. Smith said that the legislature would most likely create an exception by amending the rule to allow paper bags for online orders."

Yes, but doesn't that undermine the original intent? And, as more orders move online, the effect of the law will be further reduced. Next idea?

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

New Jersey Bag Ban's Unforeseen Consequence: Too Many Bags

By Clare Toeniskoetter

September 2, 2022

The New York Times

Late Edition – Final

A1, A11

https://www.nytimes.com/2022/09/01/climate/paper-plastic-bag-ban-new-jersey.html

 

Strategic CSR - Stigma

The article in the url below is interesting because it asks the question: "Why would anyone want to toil for a tobacco firm or a casino?" In other words, "In an age when everyone is supposed to have a purpose, why would employees who have a choice work for the baddies?" Of course, what and who constitute the 'bad guys' is a moving target, depending on the evolution of what society considers to be acceptable:

"… some sectors are stigmatised enough to be known as 'sin industries'—booze, gambling, tobacco and so on. Other industries have gone from being respectable to questionable: fossil-fuel firms, say. (A few, like cannabis firms, are travelling in the opposite direction.) Nationality now casts shadows in ways it did not before: working for a Chinese company might once have aroused admiration but now provokes suspicion."

The article suggests that the level of compensation a worker receives is part of the explanation, at least for those who rise to senior ranks:

"A paper in 2014 found that the bosses of alcohol, better and tobacco firms earned a premium that could not be explained by those companies being more complex to run, less job security or poorer governance. The size of the premium did, however, line up with periods of heightened bad publicity, such as legal settlements in the tobacco industry. The stigma that wreathed these executives was observable in other ways, too: they sat on fewer boards than bosses in more virtuous industries."

But the article counters that, although pay might be part of the explanation, on its own, it is insufficient to overcome the psychological impact of working for a stigmatized company/industry. Instead, the argument is advanced that the way these employees see what they are doing is significantly different to the way they are perceived externally:

"First, hostility itself can sometimes act as a kind of binding agent for employees of stigmatized firms. A study … found that job satisfaction increased at firms that faced disapproval, provided their employees regarded the criticism as illegitimate. Second, societies' attitudes can change, sometimes suddenly. The arms industry looks less evil now that its products are helping Ukrainians fend off Russian tanks. Dependence on Russian gas has made secure sources of energy, even if they are not low-carbon, seem more attractive."

So much so, the article argues, that employees in these industries can easily rationalize that their work is important and that they take pride in doing it in the face of external criticism – a sort of circling of the wagons and the idea that they see things that are misunderstood by others:

"Third, employees in vilified industries are often in a position to do valuable things. .. Widespread suspicion of genetically engineered crops ignores the copious evidence that they are safe and useful. And a rapid decline in the number of new petroleum engineers in America will seem less desirable if a shortfall in expertise holds back carbon-sequestration projects."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Working for the baddies

By Bartleby

August 13, 2022

The Economist

Late Edition – Final

59

https://www.economist.com/business/2022/08/11/why-employees-want-to-work-in-vilified-industries

 

Strategic CSR - Mining

I have often thought how strange it is that we occasionally get angry at consumer-facing businesses and hold them to account (inconsistently) for their supply chains, but we are less effective at targeting those B2B firms that make up those supply chains (see also Strategic CSR – Distributors). This is particularly important in extractive industries with firms that, not only can cause harm when their products are consumed (e.g., burning coal), but can also cause harm in the way that they extract those resources. The article in the url below presents an interesting case where a local community tried to do it properly – targeting the mining company (Anglo American) that was extracting copper from their land:

"Deep in a valley, at 3,500 metres in the Andes near Moquegua in southern Peru, giant terraces are being carved from the mountainside. Diggers load loose rock into 320-tonne driverless trucks which carry it to a conveyor belt. They pass by a dam built to hold back the Asana river in case it overflows the tunnel which carries it for almost eight kilometres beneath Quellaveco. This is a new $5.5bn copper mine operated by Anglo American, a London-listed multinational mining company, and part-owned by Mitsubishi of Japan."

And, the attention seems to have generated a response from the company. There is some indication that this story might not be your usual extraction industry disaster:

 

"The diggers and trucks are 'pre-mining,' stripping away surface rock to expose the copper ore below. Nearby, workers are putting the finishing touches to the plant which will extract the metal from its ore. In the next few weeks mining proper will start. It has taken more than a decade to get to this stage. With blanket Wi-Fi as well as its driverless trucks, Quellaveco is perhaps the most technologically advanced mine in Latin America. It is also a test of whether big mining has a future in a country and region in which social conflict threatens to banish extractive industries."

The article contains many examples that suggest this is a genuine attempt by the mining company to retain the support of local communities. The company had to redirect a river so that the water was not polluted, while also securing supply for local farmers:

"Other commitments came from 18 months of talks between the company, local officials and community groups. … Anglo agreed to pay for a $1bn development fund, to be spent over the 30-year life of the mine, and to fund small community projects. Perhaps its most important commitment was to hire local people, many of whom it has trained, and to give opportunities to local suppliers. Of the mine's permanent workforce of 2,500, the company says 71% are from Moquegua and 28% are women (compared with an average of 10% at mines in Peru)."

As the company transitions from construction to operation (which requires far fewer workers), the key is to retain local support. The company seems genuine in its commitment to doing so – the rationalization that is offered is consistent with a strategic CSR approach to business:

"'It's very different from ten or 30 years ago, it's not just about a mining business where you try to be efficient,' says Adolfo Heeren, Anglo American's boss in Peru. 'You have to renew your social license every day.' That costs more upfront. But if it allows continuous operations, it saves money in the long run."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

The wealth of the Andes

May 28, 2022

The Economist

Late Edition – Final

27

https://www.economist.com/the-americas/2022/05/26/a-test-of-whether-big-mining-is-socially-sustainable

 

Strategic CSR - Cobalt

The book review in the url below highlights the challenges we face in moving to an electric future. In short, there are constraints on many fronts. Not only is there ideological resistance and inertia in all aspects of the economy (including capital investments), but there are challenges simply finding and extracting the raw materials we need to effect the change we are (slowly) working towards:

"Why cobalt? Because today's smartphones, laptops, leaf blowers, toys and so much more owe their revolutionary portability to the advent of cobalt-infused lithium batteries. Up until the late 1990s, the uses for cobalt—in magnets, dyes, inks, chemical catalysts and little else—required some 20 kilotons of the mineral a year, a relatively modest figure by mining standards and one that had remained little changed over the previous three decades. Then the first lithium decade vaulted annual cobalt demand to about 60 kilotons."

Not only is it challenging to identify sufficient quantities of cobalt, but most of our known supplies are located in countries with poor labor and environmental laws:

"Three-fourths of that cobalt comes from the Congo, a market share that's more than double OPEC's claim on oil. Now comes the electric vehicle's half-ton battery, each one using thousands of smartphones' worth of minerals. Even at only 10% of global auto sales, electric vehicles have already pushed annual cobalt demand to 140 kilotons; it is expected to exceed 200 kilotons by 2026 as new battery factories come online and will explode from there when proposed EV mandates are supposed to kick in, many within the coming decade."

So, ironically, extracting the materials we need to build an electric future increases the level of environmental pollution and leads to horrendous human suffering:

"The heart of Mr. Kara's mission is to document the use of artisanal mining—that is, human digging and toting by manual, brute force rather than using trucks and backhoes. You're halfway through the book before Mr. Kara's bombshell: The artisanal share of the Congo's output, often dismissed as negligible, may exceed 30%. As the author warns: 'Do not be fooled by the word 'artisanal''—it's far from 'pleasant mining activities conducted by skilled artisans.' In place after place he visited, whether with official escorts or by surreptitious entry, what he saw was 'a hellscape of craters and tunnels, patrolled by maniacs with guns.' It was a 'lunar wasteland,' a 'devastated landscape' that 'resembled a battlefield after an aerial bombardment.'"

It is hard to even begin to imagine the hardships of those who mine this material that we need in order to feel better about the products we purchase and the lifestyle we live:

"The reader senses that the author has been left shell-shocked, not from the aesthetic carnage but from seeing thousands of people mining by hand, hammer and shovel in vast open pits hundreds of feet deep, most of the pits arrayed with hand-dug tunnels. Mr. Kara reports visiting a typical mine where 'more than three thousand women, children, and men shoveled, scraped, and scrounged … under a ferocious sun and a haze of dust.' The book has no photographs, an understandable absence given the risks of using a camera with armed guards everywhere. Instead Mr. Kara captures the impact of artisanal mining through the powerful stories of the miners—men, women and children—that he has gleaned through interviews. It's often hard to read his descriptions of the miners' daily lives, the risks, accidents, promises unfulfilled and, too often, heart-wrenching tales of maimed or dead children."

As the review of the same book (Cobalt Red) in the second url below concludes:

"How is your phone powered? Problematically. … [the author] writes, 'there is no such thing as a clean supply chain of cobalt from the Congo.' … Returning from his travels, [the author] sees Western prosperity with new eyes. 'The world back home no longer makes sense,' he writes. 'Clean air and water feels like a crime.'"

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

The Human Price of Cobalt

By Mark P. Mills

February 2, 2023

The Wall Street Journal

Late Edition – Final

A15

https://www.wsj.com/articles/cobalt-red-review-the-human-price-of-cobalt-11675293373

Assault and Batteries

By Matthieu Aikins

January 29, 2023

The New York Times Book Review

Late Edition – Final

16

https://www.nytimes.com/2023/01/23/books/review/cobalt-red-siddharth-kara.html

 

Strategic CSR - Labels

In many ways, my strategic CSR framework emerged out of an attempt to reframe the discussion around CSR, sustainability, and related 'business and society'-type labels. In that view, the "business case" for CSR/sustainability has failed, largely because companies are no longer listening. Sure, they pay enough attention to know when a fad has risen to the level where they can potentially make money from it (e.g., ESG), but they are not listening at the level that might lead to meaningful change. The article in the url below captures one reason why that might be:

"Fire-fighting foam starves the flames of oxygen. A handful of overused words have the same deadening effect on people's ability to think. These are words like 'innovation,' 'collaboration,' 'flexibility,' 'purpose' and 'sustainability.' They coat consultants' websites, blanket candidates' cvs and spray from managers' mouths. They are anodyne to the point of being useless."

In short, language matters, with inaccurate words understood as 'business jargon' that demonstrates the user's lack of knowledge or expertise, as much as anything else (a problem that has spilled over into business schools – "change management," anyone?). In the article, the author makes a compelling argument as to how to identify rhetoric that is particularly ineffective:

"The words are ubiquitous in part because they are so hard to argue against. Who really wants to be the person making the case for silos? Which executive secretly thirsts to be chief stagnation officer? Is it even possible to have purposelessness as a goal? Just as Karl Popper … made falsifiability a test of whether a theory could be described as scientific, antonymy is a good way to work out whether an idea has any value. Unless its opposite could possibly have something to recommend it, a word is too woolly to be truly helpful."

Add to this the idea that executives in a company already have their own definitions/perceptions of CSR and sustainability-related terms, so have already decided they are for/against/ambivalent, whatever. As such, the goal of strategic CSR is to instead reframe the debate in terms of "value creation" for stakeholders ("sustainable value creation"). My reasoning is that if every CEO/executive/manager gets out of bed every morning to do anything, it is to create value. While the challenge remains to understand what stakeholders want (how they define "value"), once you engage the discussion in terms of value creation, the related ideas and concepts become central to every aspect of the organization. There is nothing a business does that is not related to value creation.

Thus, while "value creation" does not strictly pass the author's test (i.e., no one wants to 'destroy value'), if you take this concept seriously within a stakeholder model focused on creating value over the medium to long term, the essential trade-offs and competing priorities mean that a firm cannot create value for all of its stakeholders, all the time.

In addition, of course, "value creation" is already widely-accepted and understood within firms. As such, it is the key to moving the discussion forward because it is doing so on the terms of those who may otherwise be hostile to the symbolism of much of the mainstream CSR/sustainability discussion.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

The wooliest words in business

May 14, 2022

The Economist

Late Edition – Final

63

https://www.economist.com/business/2022/05/14/the-woolliest-words-in-business

 

Strategic CSR - McDonald's

The headline of the article in the url below is a bit misleading, since there is a crew working behind the scenes, but the implication is clear:

"The first mostly non-human-run McDonald's is open for business just outside Fort Worth, Texas. At just one location so far, customers can drive to the golden arches and expect to be served a Big Mac or a Happy Meal by a food and beverage conveyor instead of an actual, real-life human being."

This is the 'future' for McDonald's and it doesn't take a genius to figure out why the firm is pressing for greater automation – it is a response to increasing calls for the minimum wage in fast-food restaurants to be raised, which would of course increase McDonald's costs:

This creates a conundrum for those advocating for higher minimum wages. Either the stakeholders of those firms are able to signal a willingness to pay higher prices for a personal/human touch, or firms will push for automation wherever they can introduce it. Lowering costs is just another way of becoming more efficient, which is what customers seem to say they want from firms, even though McDonald's currently pays about as low a wage as it is possible to get away with in the US:

"In Texas, the minimum wage is $7.25 an hour and hasn't increased in nearly a decade. It ranks above only Georgia and Wyoming's minimum wage of $5.15, which is $2.10 less than the US federal minimum wage. Five other states have not adopted a set minimum wage: Alabama, Louisiana, Mississippi, South Carolina, and Tennessee. … McDonald's is one of 300 publicly held companies with the lowest median worker wages, according to a 2021 Institute for Policy Studies report."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Touchscreens, conveyor belts: McDonald's opens first largely automated location

By Erum Salam

December 23, 2022

The Guardian

https://www.theguardian.com/business/2022/dec/23/mcdonalds-automated-workers-fort-worth-texas

 

Strategic CSR - Patagonia

A quick test: Who can name the CEO of Patagonia? I couldn't and I'd be surprised if many of you can, which says something (* answer is below). This realization struck me as I was reading the interview/profile of the CEO of Patagonia in the article in the url below, which I found to be interesting but largely not very surprising. True to form, he acknowledged that Patagonia is still carbon positive, even while reminding everyone that it is closer to carbon neutral than most:

"Mr. Gellert, who arrived at Patagonia in 2014 and became its CEO in 2020, helped to create the new business plan and is now responsible for executing it. 'I'm very clear-eyed that we still take more from the planet than we restore,' he says. 'But I like to think that we are offering a model of a different way of doing business.'"

The interview got interesting, in my opinion, in the last couple of paragraphs, when Gellert started discussing the trade-offs involved in his drive to make Patagonia more sustainable. These compromises are the complicated parts of what it will take to implement meaningful change – compromises that are largely ignored in the idealistic mainstream discussions around climate change:

"Mr. Gellert concedes that it is awkward to both prize the planet and produce unnecessary consumer goods. … He has expanded the company's repair and resale services to keep more of its gear out of landfills, but he notes that pursuing sustainability in anoraks and hiking pants is often harder than it looks."

More specifically:

"Is it better to waterproof products with palm oil instead of toxic chemicals when palm oil plantations tend to compromise tropical forests? Is it helpful to recycle plastic bottles into fleece if these fibers are more likely to shed microplastic particles that can end up polluting the seas?"

This is the detail of sustainability that often gets lost, but is essential if we are ever to make substantive progress. The goal is to move away from black and white decisions framed in terms of good and bad, and delve into the shades of grey that are based around relative degrees of harm. There is nothing easy about these decisions and, done properly, the implications are endless:

"Gaming out these trade-offs is 'never-ending,' says Mr. Gellert. Sustainability, he explains, isn't simply a goal that a company can achieve and then move on to other things: 'This is the work, forever and all time.'"

* The CEO of Patagonia, since 2020, is Ryan Gellert. His predecessor was Rose Marcario.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Ryan Gellert

By Emily Bobrow

February 4-5, 2023

The Wall Street Journal

Late Edition – Final

C6

https://www.wsj.com/articles/ryan-gellert-wants-patagonia-to-be-part-of-the-environmental-solution-11675444847