The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Monday, September 17, 2018

Strategic CSR - WeWork

The article in the url below covers the decision over the summer by WeWork to exclude meat from its offices. Specifically, the company announced it will no longer pay for any meals that include meat – whether that is catered events in their offices or any reimbursed meal by employees anywhere (inside the office or at a restaurant):
"The company will no longer serve red meat, pork or poultry at company functions, and it will not reimburse employees who want to order a hamburger during a lunch meeting. In a memo to employees announcing the new policy, Miguel McKelvey, WeWork's co-founder and chief culture officer, said the decision was driven largely by concerns for the environment, and, to a lesser extent, animal welfare."
WeWork has grown quickly in recent months and now employs 6,000 employees (aside from the various companies/entrepreneurs that rent its work spaces). As such, as McKelvey noted in the email he sent to employees explaining the decision, the firm can have an impact. What is interesting, however, is that this decision has little to do with animal welfare and everything to do with climate change:
"'New research indicates that avoiding meat is one of the biggest things an individual can do to reduce their personal environmental impact — even more than switching to a hybrid car,' he wrote. Additionally, WeWork could save 'over 15 million animals by 2023 by eliminating meat at our events.'"
Beyond WeWork, however, the article raises a more fundamental point about values in the workplace. Rather than the company reluctantly reflecting the values of its employees who pressure it to adopt this policy or that practice, it is companies that are shaping the behavior (and values) of their employees:
"In ways large and small, companies are imposing corporate values on the personal lives of their employees. Hobby Lobby has refused to pay for birth control for its employees, citing the owner's Christian values. And the chief executives of companies including Koch Industries and Westgate Resorts have sent memos and informational packets to employees suggesting how they vote. Other companies have tried to prevent employees from using everything from Uber to cigarettes. In 2015, IBM banned employees from using ride-sharing apps, citing safety and liability concerns. (Employees rebelled, and the company did a U-turn a day later.) And several big employers, including General Electric, have successfully paid employees to quit smoking. Scotts Miracle-Gro even has a policy of not hiring smokers, a move it says helps keep health care costs down."
Among this growing evangelism, however, "WeWork appears to be the first big company to tell its employees what they can and can't eat." The article suggests that removing choice is difficult for a company to do. Far more effective is to maintain at least the illusion of choice through the power of nudges:
"… at Google, two of the many cafes at company headquarters tried out 'meatless Mondays,' going vegetarian for just one day a week. Employees rebelled, throwing away silverware and staging a protest barbecue. Meatless Mondays didn't last at Google. But in time, the company made changes to the cafeterias — like offering smaller plates and making salad bars more prominent — that improved employees' eating habits."
For McKelvey, however, this is an issue larger than diet and larger than any one person:
"At WeWork, a company led by idealistic co-founders who got their start with an eco-friendly co-working space in Brooklyn, the move to vegetarianism is a reflection of their unconventional personalities. 'I don't eat meat, but I don't consider myself a vegetarian,' Mr. McKelvey said. 'I consider myself to be a 'reducetarian.' I try to consume less and be aware of the decisions I'm making. Not just food, but single-use plastics, and fossil fuels and energy.'"

More than an imposition on his employees that he needs to apologize for, therefore, McKelvey sees it as his duty to influence their lives:
"As Mr. McKelvey sees it, imposing his values on his employees is a natural part of being a corporate leader today. 'Companies have greater responsibility to their team members and to the world these days,' he said. 'We're the ones with the power. Large employers are the ones that can move the needle on issues.'"
As such, it seems that there is more to come:
"Uncomfortable as the new dietary policy may be, Mr. McKelvey said WeWork is only just getting started. The company is phasing out leather furniture, single-use plastics and is going carbon neutral. In time, he said, the company will evaluate its consumption of seafood, eggs, dairy and alcohol."
Take care
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Memo from the Boss: Meat is not an Option
By David Gelles
July 22, 2018
The New York Times
Late Edition – Final

Thursday, September 13, 2018

Strategic CSR - Facebook

The article in the url below reveals the fascinating extent of Facebook's plans to better understand our online behavior:
"Facebook has filed thousands of patent applications since it went public in 2012. One of them describes using forward-facing cameras to analyze your expressions and detect whether you're bored or surprised by what you see on your feed. Another contemplates using your phone's microphone to determine which TV show you're watching. Others imagine systems to guess whether you're getting married soon, predict your socioeconomic status and track how much you're sleeping."
The goal is to record, and therefore understand, every aspect of our online lives – from our political voting preferences, to our sexual orientation, to our marital and employment status, to our deep-seated biases and prejudices. Of course, Facebook would say the purpose of these ideas is to build a better product that more effectively meets our needs. Critics, of course, point out that it really allows Facebook to sell more useful information that advertisers can use to target us:
"In the first quarter of 2018, almost 99 percent of Facebook's revenue came from advertising."
And this ignores the argument that more tailored news and information the reinforces pre-existing beliefs and biases is exactly what we do not need as a society at the moment. The article features "seven Facebook patent applications that show how the company has contemplated gathering and exploiting your personal information." Here is one example of a patent that identifies small flaws in your camera lens to connect friends and acquaintances:
"[One patent] considers analyzing pictures to create a unique camera 'signature' using faulty pixels or lens scratches. That signature could be used to figure out that you know someone who uploads pictures taken on your device, even if you weren't previously connected. Or it might be used to guess the 'affinity' between you and a friend based on how frequently you use the same camera."
Why does this matter?
"… with more than two billion monthly active users, most of whom share their thoughts and feelings on the platform, Facebook is amassing our personal details on an unprecedented scale."
Take care
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Your Life, Patented by Facebook
By Sahil Chinoy
June 24, 2018
The New York Times
Late Edition – Final

Tuesday, September 11, 2018

Strategic CSR - Walmart

The article in the url below caught my eye:
"Walmart announced plans on Wednesday to offer subsidized college tuition for its 1.4 million workers in the United States, joining a growing list of companies that are helping employees pay for higher education as a perk in a tight labor market."
"The giant retailer will pay tuition for its workers to enroll in college courses — online or on campus — to earn degrees in either supply chain management or business, company officials announced at Walmart's annual shareholder meeting in Bentonville, Ark."
What with the ever-increasing competition provided by Amazon and the low levels of unemployment in the U.S., Walmart is finding that it has to become a better employer in order to attract and retain the quality of employee that it needs to run its stores/operations. Interestingly, the company is extending the support to both full and part-time workers, and seems to be genuine in wanting their employees to become better qualified:
"Full- and part-time Walmart workers can use the subsidy to take courses at the University of Florida; Brandman University in Irvine, Calif.; and Bellevue University in Bellevue, Neb. The three universities were chosen because of their high graduation rates, particularly among part-time students, and their experience with those already in the work force, Walmart executives said. The employees will not be obligated to continue working for Walmart after they get their degrees, and must put up only $1 a day toward the cost of classes."
In other words, Walmart has to create more value for one of its key stakeholders, its employees, otherwise they will go elsewhere. As such, Walmart is following the footsteps of some good companies:
"Walmart, the country's largest employer, introduced the tuition subsidy as it seeks ways to retain workers at a time of low unemployment. Employers like Starbucks and Amazon also offer tuition support."
Walmart has also learned from the prior announcements by these companies:
"Walmart said its goal was to help employees obtain a college degree without having to take out loans. Walmart workers enrolled in the program would not be required to pay for their education upfront and seek reimbursement later. When Starbucks first announced its tuition subsidy and a partnership with Arizona State University in 2014, the company was criticized for pushing the risk onto its workers by making them pay up front."
The flip side of this, of course, is that if the employees stick with Walmart, even at the relatively low pay offered, it means they believe that the firm is offering more value for them than an alternative employer. This is the key lesson that economics teaches us – assuming a voluntary relationship, when employer and employee come together at an agreed compensation package and benefits, then value is being created on both sides:
"Walmart workers will qualify for the benefit after 90 days of employment and will not be penalized if they leave the company before finishing their studies."
Take care
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Walmart to Subsidize Cost of College Tuition for its U.S. Workers
By Michael Corkery
May 31, 2018
The New York Times
Late Edition – Final

Tuesday, September 4, 2018

Strategic CSR - Recycling

The article in the url below lays out in detail the deteriorating situation in the recycling industry:
"Prices for scrap paper and plastic have collapsed, leading local officials across the [U.S.] to charge residents more to collect recyclables and send some to landfills. Used newspapers, cardboard boxes and plastic bottles are piling up at plants that can't make a profit processing them for export or domestic markets."
The extent of the problem is illustrated in the chart accompanying the story, which shows the dramatically decreasing average prices for recycled "old cardboard" and "mixed paper" since the beginning of 2017:
This situation has arisen due largely to two driving forces: First, ironically, is the rising popularity of recycling. As cities and counties have moved to expand their recycling in an effort to reduce the amount of waste being redirected to landfills, the quality of that recycling material has decreased. That is, the waste has become 'contaminated':
"U.S. recycling programs took off in the 1990s as calls to bury less trash in landfills coincided with China's demand for materials such as corrugated cardboard to feed its economic boom. Shipping lines eagerly filled containers that had brought manufactured goods to the U.S. with paper, scrap metal and plastic bottles for the return trip to China. As cities aggressively expanded recycling programs to keep more discarded household items out of landfills, the purity of U.S. scrap deteriorated as more trash infiltrated the recyclables. Discarded food, liquid-soaked paper and other contaminants recently accounted for as much as 20% of the material shipped to China, according to Waste Management Inc.'s estimates, double from five years ago."
Second, and more dramatically, is the action taken by the Chinese government at the start of 2018 to limit the amount of recycling waste being imported into their country:
"The tedious and sometimes dangerous work of separating out that detritus at processing plants in China prompted officials there to slash the contaminants limit this year to 0.5%. … The changes have effectively cut off exports from the U.S., the world's largest generator of scrap paper and plastic."
The extent of the impact of this decision is illustrated by the second chart accompanying the article, which shows the large percentage of all exported waste that was previously exported to China:
The combined effect of these two drivers is to place recycling in the U.S. in grave danger. We have to rethink our approach to recycling on a community-wide basis or the incentives to recycle our waste will gradually disappear:
"The waste-management authority in Lancaster County this spring more than doubled the charge per ton that residential trash collectors must pay to deposit recyclables at its transfer station, starting June 1. … The additional transfer-station proceeds will help offset a $40-a-ton fee that the authority will start paying this summer to a company to process the county's recyclables. Before China raised its quality standards at the beginning of this year, that company was paying Lancaster County $4 for every ton of recyclables."
The economics of the present system simply no longer make any sense:
"China stopped taking shipments of U.S. mixed paper and mixed plastic in January. … mixed-paper shipments to other Asian countries now fetch $5 a ton, down from as much as $150 last year. Other buyers such as Vietnam and India have been flooded with scrap paper and plastic that would have been sold to China in years past. … Sacramento County, which collects trash and recyclables from 151,000 homes, used to earn $1.2 million a year selling the scrap to Waste Management and another processor from scrap. Now, the county is paying what will amount to about $1 million a year, or roughly $35 a ton, to defray the processors' costs."
Ultimately, at a minimum, we are going to have to separate our recycling before it is picked-up (as the citizens of many European countries already do), with recyclers refusing to pick-up waste that is not pre-separated or cities/counties fining residents for failing to do so:
"Some recyclers said residents and municipalities need to give up the "single-stream" approach of lumping used paper and cardboard together with glass, cans and plastic in one collection truck. … Collecting paper separately would make curbside recycling service more expensive but cut down on contamination."
Take care
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Recycling Firms Hit by Crushing Economics
By Bob Tita
May 12, 2018
The Wall Street Journal
Late Edition – Final

Thursday, August 30, 2018

Strategic CSR - Extinction

The article in the url below quantifies the effect humanity has had on the other animals sharing our planet:
"Humankind is revealed as simultaneously insignificant and utterly dominant in the grand scheme of life on Earth by a groundbreaking new assessment of all life on the planet."
"The world's 7.6 billion people represent just 0.01% of all living things, according to the study. Yet since the dawn of civilisation, humanity has caused the loss of 83% of all wild mammals and half of plants, while livestock kept by humans abounds."
As noted in earlier Newsletters, the impact of humanity is leading to the declaration of a new era, the Anthropocene (see Strategic CSR – Anthropocene), but this article suggests a new indicator of this impact:
"One suggested marker for this change are the bones of the domestic chicken, now ubiquitous across the globe. The new work reveals that farmed poultry today makes up 70% of all birds on the planet, with just 30% being wild. The picture is even more stark for mammals – 60% of all mammals on Earth are livestock, mostly cattle and pigs, 36% are human and just 4% are wild animals."
This era is characterized not only by the indicators of human life (such as plastic and nuclear fallout), which will remain for millennia, but also by the devastation that humanity as caused:
"The destruction of wild habitat for farming, logging and development has resulted in the start of what many scientists consider the sixth mass extinction of life to occur in the Earth's four billion year history. About half the Earth's animals are thought to have been lost in the last 50 years. ... Just one-sixth of wild mammals, from mice to elephants, remain, surprising even the scientists. In the oceans, three centuries of whaling has left just a fifth of marine mammals in the oceans."
The graphics accompanying the article demonstrate this effect particularly well, for example:
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Humans just 0.01% of all life but have destroyed 83% of wild mammals
By Damian Carrington
May 21, 2018
The Guardian

Tuesday, August 28, 2018

Strategic CSR - Patriotism

The article in the url below tackles the issue of active stakeholder engagement. In particular, it discusses the politicization of sports here in the U.S. in the aftermath of the September 11 attacks:
"I think back to that Tuesday morning nearly 17 years ago. I was living with my fiancĂ©e on 49th Street and 10th Avenue in New York, Hell's Kitchen, covering the Yankees for The Bergen Record, when the World Trade Center fell. It changed many things. For any American born after, say, 1985, it became the most defining day of their life — their Pearl Harbor, their Cold War, their Vietnam and Watergate. But it also changed how sports were sold, packaged, perceived and marketed."
The author, who has just published a book on this subject (The Heritage: Black Athletes, a Divided America, and the Politics of Patriotism), argues that, what was originally intended to be a unifying force for a wounded country has been corrupted into paid advertisements designed to encourage military recruitment. More importantly, it has had a damaging effect on public discourse, where any attempt to divert from the accepted norm becomes an act of disloyalty:

"It all felt right, until temporary grieving turned into a permanent, commercial bonanza — and a chilling referendum on who gets to be American. But then it didn't feel right, like when in 2008, a New York police officer ejected a fan at a Red Sox-Yankees game after he left his seat during a seventh-inning-stretch recording of 'God Bless America.' Recently a high-ranking Red Sox official told me — nearly 17 years after the towers fell — that he really doesn't know why the team still plays 'God Bless America,' but he knows this: The team would 'get killed' publicly if it was the first team to stop doing it."

A good example of the 'corruption' of the patriotic displays at sports events is the extent to which they are manufactured, rather than being organic and spontaneous:
"There was another major pivot when the Department of Defense surreptitiously began paying sports teams to embed the military in the game — paying to have servicemen strategically seated at games, surprise homecomings as in-game entertainment, American flags the size of the football field — as recruiting tools. The public wasn't told that the displays weren't organic support of the troops but a business transaction between military and team. The commercials followed."
The author argues, persuasively I think, that this has had ramifications for those athletes who seek to use their platforms to promote social change; in particular, it has served to further smother the voice of African-American athletes. The conclusion is that this has been allowed to happen by everyone else. At some level we know, but we either no longer care or are too nervous to speak up:
"On it goes, the perfectly scripted games, with Law Enforcement Appreciation Night in Dallas and anti-police protests outside a Kings game in Sacramento. Sports have been remade since Sept. 11, and nobody seems to care. People even acknowledge paid patriotism to be a deception, but have decided incongruously that it's a 'harmless deception.' Ultimately, I reached another conclusion: I no longer ask 'How did we get here?' but 'How do we get out of here?' and do we even care enough to try?"

The tie-in to Strategic CSR is the idea of stakeholder engagement – that, much of what our society has become (the freedoms and rights that we have) has been won at great cost. In other words, what we take for granted is not the natural state of being, but something that has to be constantly fought for and renewed. To the extent that we give up that fight, then society can quickly revert to what was before. If we are doing that consciously (if it is change we are choosing), it is OK. If we are doing it negligently, however, then we are sacrificing much of what many others before us struggled to achieve, and we will be worse off as a result.
Take care
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How Did Our Sports Get So Divisive?
By Howard Bryant
May 12, 2018
The New York Times
Late Edition – Final

Thursday, August 23, 2018

Strategic CSR - Welcome back!

Welcome back to the Strategic CSR Newsletter!
The first newsletter of the Fall semester is below.
I am on sabbatical this semester and travelling, so Newsletters may be
more intermittent than usual.
As always, your comments and ideas are welcome.
The radio segment in the url below contains a fascinating statistic that reflects the pace of change in the nature of work:
"… 6 in 10 children starting elementary school today will end up in jobs that don't yet exist."
This statistic, which comes from the World Economic Forum, inevitably leads to the question:
"How do you get a student ready for a future that you can't really describe?"
Naturally, this has implications for the education system, in general, but also in terms of specific issues/subjects, such as CSR:
"It means that you have to be training them on how to adapt to many tough situations, how to think critically and how to immerse them in today's real world problems. Today it's very different than maybe two decades ago, where you learned just a specific skill, and you had that skill and stayed in that career for the rest of your life. The economy is changing so rapidly, not just with tech but with globalization ... You use textbooks, but you also have to create real world situations to which they react."
I wonder how business schools are responding to these evolving needs? They need to be part of the solution, but are inhabited by the same inertial forces that characterize any organization.
Take care
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Retiring Colorado Education Titans on How to Keep Schools Relevant in a Changing World
By Joella Baumann
July 25, 2018
Colorado Public Radio

Thursday, May 3, 2018

Strategic CSR - 5e

This is the last CSR Newsletter of the Spring semester.
Have a great summer and I will see you in August!
I am happy to announce that Sage has asked me to write the fifth edition of Strategic CSR. I plan to do that this Fall, with a publication date in the summer of 2019.
As such, I would like to ask for your feedback on the 4e, please. Sage is conducting a formal review of the 4e, so has probably contacted some of you for your assistance with that. If you are an adopter and Sage contacts you, please help if you can. You know the book as well as anyone and your feedback is invaluable to making improvements for the 5e.
If Sage has not contacted you, however, and you have any thoughts/ideas on how the book can be improved, please let me know. This includes content currently in the 4e that you would like to see retained for the 5e, content that you think can be excluded in the 5e, as well as new content that is currently missing.
As ever, your thoughts and comments are welcome, as well as any questions you have about the book, online simulation (, or, of course, the Newsletters.
Thank you for your support.
Take care
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Tuesday, May 1, 2018

Strategic CSR - Inequality

I have been doing some thinking recently as to whether the bifurcation of society in terms of income/wealth disparity is a natural consequence of market forces. Is it an inherent aspect of capitalism that wealth will eventually concentrate among a small subset of the population? Or, alternatively, can capitalism be tweaked to ensure a more consistent, level (read sustainable) playing field that allows wealth to follow ability from generation to generation?
I was introduced to this challenge via the fantastic (and extremely prescient) work of the Human Services Coalition (now Catalyst Miami, in Miami in the early 2000s. Daniella Levine (now an elected official on the Board of County Commissioners in Miami), who founded HSC, saw earlier than most that the middle class in Miami was being hollowed-out and that this would be the future for other major US cities.
Given the political upheavals we have seen in the past couple of years in the developed economies, and that these have largely been attributed to social inequality (as a result of globalization), my question then is: Is this an inevitable outcome of capitalism? In other words, given human nature (and our tendency towards inertia, biases, and shortcuts), is it possible to design a market (driven largely by self-interest, which rewards specific skills/merit) that, over time, results in more equitable opportunity? My sense is that it might not be possible. If so, and if we accept that altruism is an unrealistic model on which to structure society (and every previous attempt suggests this is true), what alternative structure would produce something more equitable? And, more importantly, how do we get there? To some extent, this is accounted for in Strategic CSR via an empowered stakeholder model. But, in order for it to work at the extreme, requires a significant correction – an outcome that history teaches us is usually violent and, as a result, worth avoiding (if possible).
Over the summer, I plan to think more about this. If anyone has any ideas/thoughts, I would love to hear them.
Take care
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Thursday, April 26, 2018

Strategic CSR - Environmentalism

In celebration of Earth Day this past Sunday, the article in the url below summarizes the history of the environmental movement's evolving relationship with business:
"Now widely known as Third Wave environmentalism, the idea first became a reality in 1990, when McDonald's teamed up with my organization, the Environmental Defense Fund, to reduce more than 300 million pounds of solid waste by doing away with its foam-clamshell packaging. The Third Wave built on the progress of the first two: Teddy Roosevelt-era land conservation, followed by mid-20th-century antipollution laws like the Clean Air Act."
The article then goes beyond that to argue that this relationship has entered a new phase of much closer co-operation/co-ordination:
"Market-based approaches and corporate partnerships are standard practice today. Yet too many environmentalists still regard business as the enemy, and vice versa. That may finally be changing, because an emerging wave of environmental innovation is making these partnerships more productive, and their results more precisely measurable. Call it the Fourth Wave of environmental progress: Innovation that gives people new ways to solve environmental problems."
For example:
"Last year, … Smithfield Foods, the world's largest pork producer, joined with EDF and other groups to reduce fertilizer waste on the vast network of farms from which it purchases roughly two million tons of corn each year. The move is part of Smithfield's goal of cutting supply-chain greenhouse-gas emissions 25% by 2025. The company is the first in its industry to set such a target, and its progress is enabled by corn growers' increasing investment in tools that help determine the most efficient ways to apply fertilizer."
This line of argument is perhaps all the more surprising (and welcome) because it is written by the current president of the Environmental Defense Fund. He argues that the fourth wave of environmentalism is substantively different to each of the three preceding waves, principally in terms of the complexity of the co-operation between business and environmental activists:
"Where Third Wave partnerships tended to be one-on-one, the Fourth Wave boasts many multilateral partnerships. EDF's work to measure methane emissions from the oil-and-gas supply chain involved scores of academic institutions and energy companies, and now we're working with the Netherlands Institute for Space Research to derive emissions data from the European Space Agency's Sentinel-5P satellite, sent into orbit last year. More than 400 companies have joined Walmart in its effort to reduce greenhouse-gas emissions in its global supply chain by one billion tons—more than the total annual emissions of Germany."
The key seems to be to leverage evolving technology:
"In any era, those doing the hard work of solving environmental problems take advantage of the best available tools, and in this era those tools include innovations that can help drive transparency, responsibility and low-cost solutions. Technology can obviously be used for good or ill. But when sensors, machine learning and data analytics are used to shape smart policy, rein in free riders, and reward corporate responsibility, they will enable changes that help people and nature prosper."
Perhaps, but I would think the more difficult transition is mental. The shift from seeing business as the 'enemy' to seeing it as an essential part of the solution is transformational. It is hard for activists committed to an ideologically pure vision of the environment to shift to accepting that some pollution is an inevitable cost to economic and social progress.

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Fourth Wave Environmentalism Fully Embraces Business
By Fred Krupp
March 21, 2018
The Wall Street Journal
Late Edition – Final

Tuesday, April 24, 2018

Strategic CSR - Human psychology

The article in the url below presents a fascinating, counter-intuitive perspective on the SRI industry:
"An analysis of fund inflows into U.S. stock ETFs and mutual funds that invest with a social, governance or environmental purpose (often called sustainable, ESG or impact funds) paints an interesting picture of investor psychology. Namely, while most traditional investors run for the hills when news comes out that conflicts with their expectations or ideas about the world, sustainable investors appear to dedicate more of their money to the cause when news or policy decisions that go against their values are announced."
The empirical support for this conclusion is fascinating:
"In perhaps the clearest representation of this, during December 2016, one month after the election of Donald Trump, a staggering $2.1 billion flowed into U.S. equity sustainable funds—representing a 3.5% increase in the category's total assets under management as of Nov. 1."
How exceptional was this "Trump bump"?
"The 'Trump bump' (which was the largest single monthly increase into the sustainable-investing class ever) was 170% larger than the next-largest one-month inflow. And the growth has continued. Since the election, $8.1 billion has flowed into these funds, a 13.1% jump from the assets under management on the eve of the 2016 presidential election—by far the greatest percentage inflow into any class or style of fund (e.g., value, growth, small-cap funds) since the election."
The authors extended their investigation, also looking at flows into environmental funds following the passing of COP 21 in Paris and, later, the announcement by the U.S. that it was withdrawing from the pact:
"In the month following the Paris Climate Agreement (which was signed in December 2015), $50.1 million flowed out of environmental-focused funds (amounting to a 1.05% drop in assets under management from the previous month). Conversely, when President Trump withdrew the U.S. from the climate agreement in June 2017, $98.5 million flowed into them (a 1.32% increase in assets under management)."
Similarly, the #MeToo movement appears to have influenced money flows into and out of social funds that employ gender or diversity filters:
"Surrounding the accusations of sexual abuse that came to light around Hollywood's Harvey Weinstein, Kevin Spacey and other celebrities, iShares MSCI KLD 400 Social ETF (DSI)—the largest socially conscious ETF—saw inflows of $48 million during November 2017. This was the fund's single largest monthly inflow, pushing it close to the $1 billion mark in assets. And, it isn't just individual investors who seem to be moving their money. In the four months following the news about Mr. Weinstein, TIAA-CREF Social Choice Equity Fund institutional class (TISCX) jumped $211 million (starting from $1.9 billion)—a striking 11% inflow."
People are both fascinating and frustrating, which at least keeps all of us social scientists in a job!
"Many factors are driving the increasing popularity of sustainable investing, including demographic demand (high among millennials and women), generational wealth transfer, a strong market and new sustainable financial products. But macro political and cultural trends are clearly the largest drivers—specifically, negative news that conflicts with sustainable investors' views of the world. Asset managers and wealth advisers should take note: Politics is personal, especially when it comes to investing."
This study reminds me of patterns around gun sales – when Obama (a proponent of gun reform) was elected, gun sales spiked (due to a fear that he wanted to remove guns from society by making them illegal), while sales dropped after the election of Trump (a Second Amendment supporter), leading to the bankruptcy of the 200-year-old gun-maker Remington in March. It also reminded me of subscriptions to The New York Times or viewership of CNN, which jumped the more that these media institutions have come under attack for their supposedly biased reporting.
Take care
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Ethical Investing Seems to Thrive on 'Bad' News
By Derek Horstmeyer
April 9, 2018
The Wall Street Journal
Late Edition – Final

Thursday, April 19, 2018

Strategic CSR - Carbon emissions

The article in the url below demonstrates how far we have to go before we can even begin to think about achieving sustainability. In spite of all the warning signals, we refuse to even begin taking the steps necessary to preserve the planet:
"For now, however, we're still moving in the opposite direction: Carbon dioxide emissions from the use of coal, oil and natural gas increased 1.4 percent globally in 2017 after holding steady for the previous three years, the International Energy Agency reported on Thursday. That's the equivalent of adding 170 million new cars to the road worldwide."
In particular, there are five drivers of increased carbon emissions identified by the article, each of which would be difficult to surmount (given human nature and the rapidly expanding middle class worldwide); together, they represent a formidable challenge. First, is the growth in Asia:
"Roughly two-thirds of last year's emissions increase came from Asia, where fast-growing countries like China, India and Indonesia continue to rely heavily on fossil fuels as they lift themselves out of poverty."
Second, is the insufficient growth of renewable energy:
"Last year's 'unprecedented' growth in renewables, the I.E.A. said, satisfied only about one-quarter of the increase in global energy demand as the world's economy boomed. Fossil fuels supplied the rest."
Third, is the resilience of coal:
"… coal use rebounded slightly in 2017, rising by 1 percent, driven in part by an increase in coal-fired power in Southeast Asia. A particularly hot summer in China also led the country to run its existing coal plants more often to power air conditioning."
Fourth, is growing affluence and the purchases we make that reflect it, in particular cars:
"Demand for oil rose 1.6 percent last year, much faster than the average annual pace over the previous decade. As oil prices have declined, more people in the United States and Europe are buying larger S.U.V.s, pushing up transportation emissions further."
Fifth, is the insufficient gains in energy efficiency:
"In 2017, the energy intensity of the global economy — a measure of efficiency — improved by just 1.7 percent, a slower pace than in each of the previous three years. The agency noted that many countries appear to be easing up on government policies to improve energy efficiency."
A second article on the same day and the same page of The New York Times reminds us that carbon is only one of the many toxic materials we pump into the environment at an unsustainable rate:
"In the Pacific Ocean between California and Hawaii, hundreds of miles from any major city, plastic bottles, children's toys, broken electronics, abandoned fishing nets and millions more fragments of debris are floating in the water — at least 87,000 tons' worth, researchers said. …  [The so-called garbage patch] is four to 16 times bigger than previously thought, occupying an area roughly four times the size of California and comprising an estimated 1.8 trillion pieces of rubbish."
Take care
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Behind the Increase in Gas Emissions Last Year
By Brad Plumer
March 23, 2018
The New York Times
Late Edition – Final

Tuesday, April 17, 2018

Strategic CSR - Carbon pricing

This week's Newsletters will focus on our consumption of carbon, either directly (via emission levels) or indirectly (via market pricing). To begin, the article in the url below discusses the range of efforts being implemented to tackle climate change in the way recommended by most economists – to price carbon emissions. At some level, this is gaining traction among some governments that are finally beginning to take climate change policy seriously:
"A total of 41 OECD and G20 governments have announced either a carbon tax or a cap-and-trade scheme, or both. Add state and local schemes, and they cover 15% of the world's emissions, up from 4% in 2010."
While impressive on the surface, such schemes (cap-and-trade, in particular) are not comprehensively exposed to market forces and, as such, are subject to distorting political influences. Seeing the day when carbon taxes are coming, however, companies are not waiting to be told what to do:
"Companies are moving faster than many governments on carbon pricing. Nearly 1,400 firms globally with combined revenues of $7trn already use, or soon will, 'internal carbon prices.'"
This is happening at a pace that is not widely recognized:
"Of the 6,100-odd firms which report climate-related data to CDP, a British watchdog, 607 now claim to use 'internal carbon prices.' The number has quadrupled since CDP first began posing the query in its annual questionnaire three years ago. Another 782 companies say they will introduce similar measures within two years. Total annual revenues of these 1,389 carbon-price champions amount to a hefty $7trn. Most come from rich countries, but more developing-world firms are joining them."
In most cases, firms charge departments internally for the amount of carbon they use (whether in production or executives flying to meetings overseas), with the goal of reducing the firm-level total. Microsoft and Disney are both mentioned in the article as early adopters. Shell is also a proponent:
"In his day job as chief executive of Royal DSM, Mr Sijbesma has made the Dutch food producer examine all proposed ventures to check whether the sums still add up if a ton of carbon dioxide cost €50 ($60), well above the going rate of €6 or so in the European Union's emissions-trading system, which is kept low by an oversupply of permits. Where they do not, alternative feedstocks or cleaner energy suppliers must be found. If a project still looks unprofitable, it could be discarded altogether."
What I found interesting in the article, however, is the extent to which firms are differentiating between the short and long term in their planning:
"Besides assessing capital projects at €30 per ton of carbon dioxide, Saint-Gobain, a French maker of building materials, factors in a higher price of €100 per ton when choosing between long-term research-and-development projects. AkzoNobel, a Dutch chemicals giant, uses €50 per ton for most investments, but double that for those with lifetimes of 30 years or more."
Needless to say, implementation is inconsistent across firms. Nevertheless, the fact that so many firms are innovating in this area suggests there is support for governments to introduce a carbon tax, which immediately exposes all carbon-pricing schemes to market forces and all firms to the full costs of production. When (not if) this happens, those firms that are being the most creative and experimental today will see the largest and quickest benefit.
"Such voluntary steps will not stop the planet sizzling. But they help firms prepare for when governments do bring in pricing schemes. In December China launched a market for trading carbon emissions which is the world's largest. The clearest sign of progress would be for similar policies elsewhere to render internal exercises redundant."
Take care
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Low-carb diet
January 13, 2018
The Economist