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

To sign-up to receive the CSR Newsletters regularly during the fall and spring academic semesters, e-mail author David Chandler at david.chandler@ucdenver.edu


Wednesday, April 30, 2008

Strategic CSR - Climate Change I

Rather than the impending disaster that characterizes much of the debate surrounding climate change, the article in the url below presents the need to act as an opportunity:

“Solving global warming will be an added cost, yes -- but a bargain compared with the economic cost of unchecked climate change. And fixing this problem will create an historic economic opportunity.”

This perspective contrasts strongly with the IPCC report on climate change that heralds an approaching disaster with potentially devastating economic consequences, while assuming a relatively static technological knowledge base into the future. Given the vast array of intellectual and entrepreneurial resources being dedicated to developing alternative solutions, the article argues that the last remaining piece of the puzzle is a legal environment that provides predictability and accurately prices carbon:

“These bold ideas are nearly ripe, but without a strong economic incentive they won't come to market at a speed and scale sufficient to beat the swift pace of global warming. The big money, the billions of dollars required to take these technologies to the necessary scale, remains on the sidelines, waiting until the U.S. Congress sets a cap on carbon and makes the rules of the game fair and clear.”

While I think that a carbon tax would be more effective and efficient than a cap-and-trade scheme, I wouldn’t expect the WSJ to agree and the general points of the author’s argument remain valid regardless:

“Under a cap-and-trade regime, Congress will set limits on greenhouse gas pollution, and ratchet down those limits over time. Congress won't dictate to business which technologies to use -- the marketplace will determine the ones that work best at the lowest cost. Cap-and-trade is a proven approach. When applied to acid rain pollution in the 1980s, it solved the problem faster and cheaper than anyone thought possible.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Climate Change Opportunity
By Fred Krupp
826 words
8 April 2008
The Wall Street Journal
A20
http://online.wsj.com/article/SB120761565455196769.html

Tuesday, April 29, 2008

Strategic CSR - Water

The article in the url below outlines the problems caused by inequitable access to water around the world:

“Figures from other countries confirm the evidence: it is generally the poorest who pay most for what is one of the most essential of all natural resources. Water is in short supply for a large proportion of the world's people: about 1bn lack access to clean water and 2.6bn have no sanitation. An estimated 5,000 children die every day from water-related disease, according to WaterAid, the London-based charity.”

The article argues that it is inefficiencies in the distribution of water among communities that is the problem, rather than the availability of the resource in the world as a whole:

“… as each shower of rain serves to remind, water is just about the most renewable natural resource. The problem is its distribution - not only the climatological patterns that leave some places parched while others flood but also the way societies manage their water resources.”

It is inadequate distribution and inequitable access that leads to the huge price differentials paid by different communities for the same product (fresh water). Finding a solution and being able to price water to reflect its availability would go a long way to conserving supplies and solving many of the problems highlighted in the article:

“This is hardly a problem confined to the developing world. Farmers in Spain are estimated to pay a price for water that is only about 2 per cent of its real cost. Rice and wheat farmers in California's central valley use one-fifth of the state's water but the low prices they pay represent a yearly subsidy estimated at Dollars 416m for 2006.”

Some of the statistics associated with water consumption are amazing and reflect the under-pricing of this vital resource:

“… the price of many goods sold around the world shows that the water that went into their production was very cheap. A pair of jeans that sells for a few pounds uses up to 11,000 litres of water, according to Waterwise, a UK not-for-profit organisation. A hamburger that sells for less than a dollar requires more than 2,400 litres of water to produce.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

A costly thirst: Proper pricing of water could ease shortages.
By FIONA HARVEY
1824 words
4 April 2008
Financial Times
London Ed1
Page 9
http://us.ft.com/ftgateway/superpage.ft?news_id=fto040320081337067027

Monday, April 28, 2008

Strategic CSR - Carbon trading

The article in the url below tracks the introduction of the EU’s carbon trading scheme, which, in spite of several teething issues, remains resilient:

“The global trade in greenhouse gases was worth about Euros 40bn last year, up 80 per cent on the previous year, and is expected to increase to Euros 63bn (Dollars 98bn) next year, according to Point Carbon, the market analysts. Most of the trading was carried out under the EU's emissions trading scheme, but about Euros 12bn came from the United Nations system of emissions trading under the Kyoto protocol.”

The problems identified in the article reinforce the message I get from everything I read about carbon trading, which is that a carbon tax would be a much more fair and equitable method of arriving at a more realistic price for carbon (and reducing consumption). Unfortunately, however, it is politicians who decide the framework in which such decisions are made and there seems to be heavy reluctance to touch any kind of ‘tax’ with a barge pole:

“The cap on carbon has been tightened for the second phase of the scheme, which runs to 2012. Instead of a surplus, there should be a difference of a few per cent between what companies are expected to emit and the number of permits they have been allocated. However, this could be substantially affected by a worsening economic situation - any industrial slowdown would lead to a decline in emissions, narrowing the shortage of permits and cutting their price. The uncertain future of the market was also underlined when the European Commission unveiled its proposals for emissions cuts earlier this year, when a row broke out over whether companies should have to buy their carbon permits after 2013, when the scheme enters its third phase.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Carbon trading grunts into life.
By FIONA HARVEY
703 words
2 April 2008
Financial Times
Asia Ed1
Page 17
http://us.ft.com/ftgateway/superpage.ft?news_id=fto040120081606556621

Friday, April 25, 2008

Strategic CSR - Plastics

The article in the link below uses Whole Food’s recent announcement that it will stop making plastic bags available for its customers (http://www.wholefoodsmarket.com/byobag/) to highlight the extent to which modern society relies on plastics and the conflict we face in trying to find environmentally-friendly alternatives:

“We adore plastics for their versatility, lightness, strength and affordability, and it seems we can't get enough: the United States produced 6.5 billion pounds of raw plastic in December alone, up 2.3 percent from a year earlier. We deplore plastics for being cheap petroleum products and fear we'll never get rid of them.”

The article also looks at some of the unforeseen consequences of the recent drive to reduce the consumption of plastic bags:

“Bravo. Now tell me this: What am I supposed to line my garbage cans with? … So if I have to buy plastic bags by the box, that's better for the environment how?”

The upshot is that there is a great deal of promising research being conducted and there may be a future for plastics made from alternatives to oil:

“… the field is evolving rapidly, as researchers strive to spin plastics from renewable sources like sugar cane and grass clippings in lieu of fossil fuels, and to outfit their creations with the chemical grace to decay once discarded.”

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Adored, Deplored and Ubiquitous
By NATALIE ANGIER
1156 words
15 April 2008
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2008/04/15/science/15angi.html

Thursday, April 24, 2008

Strategic CSR - Patents

The article in the url below profiles Yusuf Hamied, the CEO and largest shareholder of Cipla, a firm in India that breaks pharmaceutical patents by copying drugs and selling them at vastly reduced prices (Issues: Patents, p253). This business model has turned Cipla into one of India’s largest firms and “the largest supplier of antiretroviral drugs in the world”:

“To his supporters, Hamied has saved countless lives by making medicines affordable. But to his critics - above all the large western pharmaceuticals who first developed the drugs - he is a ''pirate'', an opportunist who has exploited others' intellectual property to swell his own profits. In the process, they say, he is undermining investment in future medicines, including the next generation of HIV therapies.”

The business model is extended across the board to hundreds of different kinds of drugs:

“We have more products than any (drug) company in the world,'' Hamied says. ''More than a thousand for humans, and a hundred for animals. That's because they are, in inverted commas, 'copy products'.”

Rather than a threat to the large western pharmaceutical firms, however, Hamied argues that he wants to collaborate with them to broaden the markets to which they can supply and for which there is overwhelming demand for pharmaceutical products:

“Hamied argues that western drug companies should - at best in exchange for modest royalties - allow generic producers to compete by making their medicines available immediately at the lowest possible cost, giving access to many more patients who would not otherwise be able to buy them.”

Needless to say, Cipla has run into significant resistance:

“''The first six months were absolute hell, as big pharma tried to run us down,'' [Hamied] says. Richard Sykes, head of Glaxo, denounced Hamied as a ''pirate'' and described the quality of Indian generic drugs as ''iffy''. Hamied fired back, saying that the company was a ''global serial killer'' for charging such high prices.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The man who battled big pharma.
By ANDREW JACK
2829 words
29 March 2008
Financial Times
Surveys MAG1
Page 14
http://us.ft.com/ftgateway/superpage.ft?news_id=fto032820081826526065

Wednesday, April 23, 2008

Strategic CSR - Chipotle

The article in the url below profiles a fast-food company that is edging towards sustainability and profiting as a result (Issues: Environmental Sustainability, p171; Special Cases of CSR: Fast-food Industry, p283):

“Good food wrapped in a socially responsible message has created legions of Chipotle fans -- and a superhot business. … by year's end, it will have 840 stores and top $1 billion in annual sales.”

In spite of the firm’s questionable parentage (the chain was bought by McDonald’s in 1998, but is independent again now), Chipotle is claiming a market niche for itself by focusing on high quality products:

“The chain now serves only rBGH-free dairy products, and all of its pork meets its standards for hormone- and antibiotic-free, humanely raised meat, as does 80% of its chicken and 50% of its beef. That makes Chipotle the largest restaurant buyer of humanely raised meat.”

Chipotle’s founder and CEO, Steve Ells, is committed to the humane treatment of animals throughout the food industry as a means of enhancing the “dining experience” for consumers:

“Ells's vision -- "We want to influence the supply chain in the United States," he says -- comes at a cost. … Chipotle has to pay a premium for Ells's passion, and so do his customers (the average burrito is now $6 to $7).”

Chipotle’s success is being noted by the competition:

“Burger King and Wendy's, the No. 2 and No. 5 U.S. chains, respectively, recently began to explore humane-pork options.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Ode To A Burrito
It's a dilemma for investors who want hefty returns and a clean green conscience: Can you own Big Oil and still feel good in the morning?
Fast Company Magazine
From: Issue 124 | April 2008 | Pages 54-56 | By: Arianne Cohen
http://www.fastcompany.com/magazine/124/ode-to-a-burrito.html

Tuesday, April 22, 2008

Strategic CSR - Stakeholders

In Strategic CSR, we advocate the position that it is in a firm’s best long term interests to attend to the needs and demands of as broad an array of stakeholders as possible (Chapter 1: Toward a Responsible Society, p3; Issues: Stakeholder Relations, p138). This is easier said than done, of course. In practice, it is much harder for firms to prioritize among stakeholders (they can’t please everyone all the time) and deal with conflicting stakeholder interests when they arise.

The short article in the url link below (actually a part of the larger column) speaks to this issue, arguing that the consumer is not always right and that expending too many resources on satisfying the needs and demands of the pickiest of stakeholders is often counterproductive. The article cites the website of Alexander Kjerulf (http://positivesharing.com/), a “business consultant” who titles himself, “Chief Happiness Officer”:

“Believing that “the customer is always right” is just plain wrong, [Kjerulf] writes. He cites several examples of why companies shouldn’t be spending too much time and money to make a troublesome customer happy. Some customers are simply better for business than others, he says. And it’s unfair that “abusive people get better treatment and conditions than nice people.””

The website provides a number of examples to support Kjerulf’s position and might be instructive for firms seeking to adopt a broader stakeholder perspective. Firms cannot be held hostage by a fringe stakeholder group that does not represent a position that is relatively broadly held:

http://positivesharing.com/2008/03/top-5-reasons-why-the-customer-is-always-right-is-wrong/

Equally, however, a firm should not ignore a stakeholder group’s legitimate position just because it is not sufficiently influential to cause the firm financial harm. As with most things in life, balance is essential.

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The Thin Skin of Apple Fans (Customers’ Disservice)
By DAN MITCHELL
104 words
22 March 2008
The New York Times
Late Edition - Final
5
http://www.nytimes.com/2008/03/22/business/22online.html

Monday, April 21, 2008

Strategic CSR - Patagonia

The press release in the first url below tracks the evolution of the cutting edge practices some firms are adopting regarding CSR reporting (Chapter 4: CSR Audit and Report, p72; Issues: Auditing CSR, p94):

“With its Footprint Chronicles, Patagonia is taking the next step in a broader trend toward greater transparency on corporate social and environmental impacts. A website that tracks and discloses “the good and the bad” in Patagonia’s supply chain, the Footprint Chronicles build on a history of bold actions by other companies seeking to be “candid and forthright” in their transparency.”

Greater levels of transparency allow a firm’s stakeholders to better understand a firm’s actions and compare it to expectations. Minimizing the information asymmetry that exists between firms that control access to much of the information stakeholders need to evaluate firm performance stands to reduce uncertainty and head off potential unnecessary clashes. Rather than see greater transparency as a burden or intrusion, therefore, the most progressive firms will view it as an uncertainty reduction and risk management tool in its attempts to meet the needs and demands of key stakeholder groups:

“Patagonia, like its predecessors, figures its customers and investors are savvy enough to know that problems exist in its manufacturing processes. So instead of glossing over them, Patagonia exposes the problems--in hopes of partnering with its customers to create solutions.”

Additional detail about Patagonia’s “Footprint Chronicles” initiative—“an effort to document and share with customers information about the environmental effects of every link in the supply chain,” is contained in the article in the second url below.

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The Latest Corporate Social Responsibility News - Patagonia Takes Next Step in Corporate Transparency and Accountability
Borrows Elements from The Gap, Timberland, and Stonyfield
CSRwire Weekly News Alert
http://www.csrwire.com/News/11480.html

Measuring Footprints
A new program at Patagonia tells consumers about the eco-impact of its products -- and helps the company get greener.
Fast Company Magazine
From: Issue 124 | April 2008 | Pages 59-60 | By: Alissa Walker
http://www.fastcompany.com/magazine/124/measuring-footprints.html

Friday, April 18, 2008

Strategic CSR - Sustainability

The video in the url below condenses the convoluted, passionate, and often partisan debate about climate change into a straight forward argument (Issues: Environmental Sustainability, p171):

The Most Terrifying Video You'll Ever See: http://video.stumbleupon.com/#p=p6o08udcmw

The goal of the presentation is to remove the conflict over the science behind climate change and global warming from the debate and instead, reduce the argument to one of risk management. In other words, whether you believe in the science or not, the dangers of not acting far outweigh any dangers associated with acting.

Unlike the video’s title implies, I do not think this is the “most terrifying video” I’ll ever see, but the presenter makes his case very well and the most important message, for me, seems to be to focus on “the columns” rather than “the rows” (you’ll have to watch the video to understand what I am referring to).

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Thursday, April 17, 2008

Strategic CSR - Fashion

The article in the url link below highlights the prominence of sustainability and recycling in fashion and luxury brands this year (Issues: Advertising, p151; Brands, p153):

“This spring, the list of designers using recycled materials in their collections could go on for pages. … Less is not just more, it's "in". But is it authentic? Or is it just all about image?”

The article questions the commitment of various brands to the cause and suggests, instead, that many are merely jumping on the bandwagon for short term gain:

“… the recycling logo appeals to fashion in the same way as the peace symbol did in the 1960s. … just as it was easier to wear a symbol than take a stance on war, so it is with recycling.”

The article’s conclusion is a valid one—that concern with the environment, as with all issues related to CSR, is positively correlated with economic development (Chapter 1: The Cultural and Contextual Assumptions, p13):

“… the issue of recycled luxury goods is actually one of luxury. … There is a hierarchy of needs; those struggling are not thinking about what happens to their trash."”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Sign of the times - The issue of eco-friendly fashion may be more grey than green
By SYL TANG
698 words
8 March 2008
Financial Times
London Ed1
Page 6
http://www.ft.com/cms/s/0/a0fb5c96-ebf6-11dc-9493-0000779fd2ac.html

Wednesday, April 16, 2008

Strategic CSR - Wal-Mart

The article in the url below presents a proactive corporate response to the loss of control over the flow of information online (Figure 3.4: The Free Flow of Information, p56). Wal-Mart has created a new blog for its buyers (the firm’s third attempt at blogging) to review critically the products that end up on Wal-Mart’s shelves (Chapter 2: CSR: Do Stakeholders Care? p25):

“Corporate blogs are nothing new -- General Motors, Dell and Boeing have them -- but Wal-Mart's site, called Check Out (http://checkoutblog.com/), turns the traditional model on its head. Instead of relying on polished high-level executives, it is written by little-known buyers, largely without editing.”

Wal-Mart framed the blog as an uncensored insight into the perspective of its buyers. Critics, in response, suggested the NYT was taken-in by Wal-Mart’s PR spin (http://www.corpwatch.org/article.php?id=14961). Either way, which products do, or do not, make it on to Wal-Mart’s shelves, to some extent, reflects the tastes of contemporary society and has ramifications beyond the individual supplier firms involved:

“It was a blogger on the Check Out, after all, who first disclosed last month that Wal-Mart would stock only high-definition DVDs and players using the Blu-ray format, rather than the rival HD DVD system. The decision was considered the death knell for HD DVD.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Unbound, Wal-Mart Tastemakers Write a Blunt and Unfiltered Blog
By MICHAEL BARBARO
1181 words
3 March 2008
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2008/03/03/business/03walmart.html

Tuesday, April 15, 2008

Strategic CSR - IKEA

The press release in the url link below complements a recent Newsletter that highlighted the steps taken in Ireland to reduce the consumption of plastic bags. By implementing a tax on plastic bags, the Irish government was able to reduce plastic bag use by over 90%. In this press release, IKEA announces the results of the first year of its plan to minimize the number of plastic bags used by its customers and, again, reports a huge reduction:

“With the introduction of its leadership 'bag the plastic bag' program in March 2007, IKEA set a goal of reducing its US stores' plastic bag consumption by 50%; from 70 million to 35 million plastic bags in the first year. The call was to go reusable with the iconic IKEA blue bag for $.59 or use an alternative reusable bag. … Now it is one year since the program began and IKEA is overwhelmed with the stunning results; more than 92% of their customers said no more plastic bags!”

As a result of these initial results, the firm is extending its policy to remove all paper and plastic bags from its stores:

“This landmark program has now resulted in IKEA taking another step forward; as of October 1, 2008, IKEA will no longer offer plastic bags, and paper bags are not available in IKEA stores either. IKEA's consumer call-to-action is to use only reusable bags.”

The environmental impact of these policies has the potential to be very significant:

“According to the Environmental Protection Agency, the U.S. consumes over 380 billion plastic bags, sacks and wraps each year. Each year, Americans throw away some 100 billion polyethylene plastic bags, and less than one percent of them are recycled. … And it takes 14 billion trees to produce 10 billion grocery bags.”

While I am no fan of knee-jerk government intervention, the example of Ireland, combined with the IKEA results, indicates the potential for social policy to shift public behavior radically in positive ways. The pros and cons of pursuing such policies are discussed in the article in the second url below:

“… "choice architecture" - like the architecture of a well-designed public space - can coax (or herd) people in desirable directions at little or no cost to their autonomy and freedom. … By "specifying the kinds of situations in which people are least likely to make good choices" (eg, school cafeterias where they choose desserts over fruit) and structuring choices so as to counteract biases (eg, placing fruit more prominently than desserts), government and business can entice people to choose things that are better for them.”

The author argues against the tendency to try and overly-control, however, bringing up broad and important issues concerning the ability of government to limit individual freedom to choose:

“When you postulate a gap between people's wishes and their "real" requirements, you delegitimise the former. But you do not invalidate Lord Acton's adage about power corrupting.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther


CSRwire Press Release
4.02.2008 - 09:04am ET
Press release from: IKEA
The Results are in...Over 92% of IKEA Customers Bagged the Plastic Bag!  As of October 2008, IKEA will no longer offer plastic or paper bags.
http://www.csrwire.com/News/11588.html

The perils of shaping choice.
By CHRISTOPHER CALDWELL
975 words
5 April 2008
Financial Times
Asia Ed1
Page 7
http://us.ft.com/ftgateway/superpage.ft?news_id=fto040420081442397238

Strategic CSR - Microfinance

I am not sure if the interview with Muhammad Yunus in the url link below about the launch of Grameen America (a branch of Grameen Bank, which, along with Yunus, won the 2006 Nobel Peace Price) is inspiring or depressing (Issues: Loans, p188). Inspiring because it is bringing much needed assistance to those who have the motivation to benefit from it. But, depressing because an institution that meets a vital social need in the developing world as an alternative to the loan sharks and other market predators who were the only source of credit for millions, is now deemed to be necessary in the U.S.:

“Mr. Yunus has now brought Grameen to this borough of New York City. Since taking off in January, Grameen America has lent out a total of $145,000, with interest rates at around 15% on the declining loan balance.”

The advantages for the borrowers are clear:

“Grameen cases are extremely risky," [Yunus] says. "Because not only are we poorest, [borrowers] don't have collateral, they don't have guarantees, they don't have lawyers, nothing. How risky can you get? Still, our money comes back." Grameen has claimed that over 98% of their debts are repaid.”

And the Bank’s business model is both simple and ingenious:

“Grameen, crazy as it may sound, "assumes that every borrower is honest." But it does have ways to help ensure repayment. Each borrower joins a group of people from similar social and economic conditions, and the group approves the loan request of each member. In this way, the group assumes "moral responsibility" for the loan. Mr. Yunus's use of the female pronoun is not accidental. He says Grameen Bank's borrowers are 97% women, the result of a very deliberate policy. … "we started noticing that money going to the family through women brought so much more benefit to the family than the same amount of money going to the family through men …. Let's focus on women because it changes the family faster."”

In the article, Yunus criticizes Bill Gates’ idea of “creative capitalism” and expands on his own idea of “social businesses” and makes a good point:

“Mr. Yunus freely acknowledges that the free market has done a great deal for the poor. "I didn't say that what is there is wrong. I said the structure was not complete. One piece was missing. We couldn't express within the business world all the things we want to do for others."”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The Weekend Interview with Muhammad Yunus: Subprime Lender
By Emily Parker
2134 words
1 March 2008
The Wall Street Journal
A9
http://online.wsj.com/article/SB120432950873204335.html

Friday, April 11, 2008

Strategic CSR - A&F

The article in the url link below demonstrates the dangers for firms that rely on controversy as a marketing tool (Issues: Advertising, p151). Abercrombie & Fitch has long utilized risqué advertising, of dubious social value, to appeal to its teenage target market (Issues: Sex, p268). In seeking the legitimacy gained through a $10 million donation to a new ER of a children’s hospital (for which the hospital granted the firm naming rights), however, A&F is discovering the limits to its strategy. A coalition of children’s advocate groups is resisting the hospital’s decision:

“It is troubling that a children's hospital would name its emergency room after a company that routinely relies on highly sexualized marketing to target teens and preteens,'' the members of the coalition wrote in a letter [sent to the hospital] …  ''A company with a long history of undermining children's well-being is now linked with healing.”

Even though there is some truth to the saying that ‘any publicity is good publicity,’ I do not think it can be good for any firm to provoke some of the reactions that A&F is able to generate as:

“… among the worst corporate predators'' for ''sexualizing and objectifying children.”

Sex still sells, but I am not so sure it maximizes long term social value:

“The sex-drenched images of toothsome young men and women that Abercrombie & Fitch has used for years to sell its own-brand apparel in ads, posters and catalogs have made the company and its chief executive, Michael S. Jeffries, billions of dollars -- and countless enemies.”

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

When a Corporate Donation Raises Protests
By STUART ELLIOTT
1149 words
12 March 2008
The New York Times
Late Edition - Final
5
http://www.nytimes.com/2008/03/12/business/media/12adco.html

Thursday, April 10, 2008

Strategic CSR - Wal-Mart

The only thing surprising about the article in the url link below is that the FT deemed it sufficiently newsworthy to put it on the front of its ‘Companies and Markets’ section (Issues: Advertising, p151; Brands, p153):

“Wal-Mart, one of the biggest corporate charitable donors in the US, is overhauling how it gives its money to ensure philanthropic efforts are more closely linked to its brand positioning.”

The idea that any firm should do anything other than align its philanthropic donations with its defined interests seems shocking. This is not intended to diminish the social value of corporate philanthropy; merely to indicate that firms have expertise in specific areas. If they are to donate anything of value, it makes sense to do it in an area in which the firm excels, has a stake, and can benefit in terms of a higher profile. I am not trying to be overly controversial, but the more I think about it, the only argument I can think of not to transfer the corporate philanthropy budget into the marketing department is that the tax free status of charitable donations seems to maximize the amount of dollars donated.

As with anything connected to Wal-Mart, the numbers are huge, but it is interesting that the company remained a CSR pariah for so long given the vast amounts of money it donates:

“Wal-Mart gave away more than Dollars 290m in the US last year, a level of corporate giving approached only by Bank of America, the largest US retail bank, and about double the gifts made by GE, JPMorgan Chase and Ford.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Wal-Mart makes its big charity spend go further for the brand.
By JONATHAN BIRCHALL
420 words
4 March 2008
Financial Times
USA Ed1
Page 17
http://www.ft.com/cms/s/0/f9ac7ff4-e98b-11dc-8365-0000779fd2ac.html

Wednesday, April 9, 2008

Strategic CSR - BOP

The article in the url below from BusinessWeek presents an enlightened, progressive approach to combating poverty at the Bottom of the Pyramid (BOP) that was developed by Paul Polak, founder of the nonprofit organization International Development Enterprises (IDE) (Issues: Profit, p200):

“Founded by Polak in 1981, IDE is based on the belief that there are simple solutions to the seemingly complex problem of poverty, and that those solutions are based on enabling the entrepreneurial spirit of the poor.”

Given the fact that “800 million of the world's poorest earn their living from one-acre farms”:

“IDE's focused mission has been to develop radically low-cost tools that will help subsistence farmers become small-scale commercial farmers. … IDE only develops products that will pay for themselves in the first year through the buyer's increased productivity.”

As well as design innovative products, IDE also invests in others who are pursuing equally innovative solutions:

“When IDE began promoting treadle pumps in Bangladesh in the 1980s, for instance, the organization recruited four manufacturers to produce the pumps by offering them marketing assistance.”

Polak reports that his focus on market solutions for poverty instead of charitable handouts, rather than being welcomed, has run into resistance from entrenched interests within the international development community. Polak believes, however, that:

“The only sustainable, scalable approach to fighting poverty is to give poor people a way of increasing their income; to treat the poor as potential entrepreneurs, rather than as recipients of charity.”

As quotes from Polak in the article illustrate, there are often unforeseen consequences of well-intentioned charitable interventions that often undermine the broader objectives that justified the initial action. And, ultimately:

“"We have invested a staggering $568 billion in development aid in Africa over the past 42 years, and have very little to show for it," says a World Bank economist quoted in Out of Poverty.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Business Week Online
Insider Newsletter
February 28, 2008
********************
Giving the Poor a Means to Work
Paul Polak and his company, International Development Enterprises, have helped 17 million people lift themselves out of poverty
by Jessie Scanlon
http://newsletters.businessweek.com/c.asp?695386&c55a2ee820194f0f&69

Tuesday, April 8, 2008

Strategic CSR - Sustainability

The article in the url link below from BusinessWeek mounts a direct attack on the business case for environmental sustainability by exposing much corporate action on this issue as PR greenwash (Issues: Environmental Sustainability, p171):

“Companies continue to assess most green initiatives with the same return-on-investment analysis they would use with any other capital project. And while some environmental advances pay for themselves in time, returns often aren't as swift or large as competing uses of corporate cash. … many major initiatives simply aren't money-savers. They come with daunting price tags that undercut the conviction that environmental salvation can be had on the cheap.”

The problem surrounding ‘renewable energy credits’ (RECs), or carbon emissions off-sets, exemplify the extent of greenwash that is occurring:

“RECs are a type of financial arrangement that companies increasingly use to justify assertions that they have reduced their net contribution to global warming. But the most commonly used RECs, which are supposed to result in a third party's developing pollution-free power, turn out to be highly dubious (BW—Mar. 26).”

The ambitious sustainability claims of large firms followed by erratic implementation are typified by the Fed Ex example presented:

“Hailed as an environmental pioneer, FedEx (FDX ) says on its Web site that it is "committed to the use of innovations and technologies to minimize greenhouse gases." With 70,000 ground vehicles and 670 planes burning fuel, the world's largest shipper is a huge producer of heat-trapping gases. Back in 2003, FedEx announced that it would soon begin deploying clean-burning hybrid trucks at a rate of 3,000 a year, eventually sparing the atmosphere 250,000 tons of greenhouse gases annually from diesel-engine vehicles. "This program has the potential to replace the company's 30,000 medium-duty trucks over the next 10 years," FedEx announced at the time. The U.S. Environmental Protection Agency awarded the effort a Clean Air Excellence prize in 2004. Four years later, FedEx has purchased fewer than 100 hybrid trucks, or less than one-third of one percent of its fleet. At $70,000 and up, the hybrids cost at least 75% more than conventional trucks, although fuel savings should pay for the difference over the 10-year lifespan of the vehicles. FedEx, which reported record profits of $2 billion for the fiscal year that ended May 31, decided that breaking even over a decade wasn't the best use of company capital. "We do have a fiduciary responsibility to our shareholders," says environmental director Mitch Jackson. "We can't subsidize the development of this technology for our competitors."”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Business Week Online
Insider Newsletter
Friday, October 19, 2007
********************
LITTLE GREEN LIES
The sweet notion that making a company environmentally friendly can be not just cost-effective but profitable is going up in smoke. Meet the man wielding the torch.
http://newsletters.businessweek.com/c.asp?678258&c55a2ee820194f0f&2

Monday, April 7, 2008

Strategic CSR - The Internet

The article in the url link below from BusinessWeek highlights the importance of firms meeting the needs of their various stakeholder groups (Issues: Stakeholder Relations, p138) and the power of the internet to magnify any mistakes or inconsistencies (Issues: Internet, p237):

“Meet today's consumer vigilantes. Even if they're not all wielding hammers, many are arming themselves with video cameras, computer keyboards, and mobile devices to launch their own personal forms of insurrection. … After getting nowhere with the call center, they're sending "e-mail carpet bombs" to the C-suite, cc-ing the top layer of management with their complaints. … And of course, they're filling up the Web with blogs and videos, leaving behind venom-spewed tales of woe.”

Although there is an over-enthusiastic desire to shift all responsibility to the firm and the action is a little extreme in cases, firms, I think, have brought a large part of this burden on themselves:

“Behind the guerrilla tactics is a growing disconnect between the experience companies promise and customers' perceptions of what they actually get.”

This might always have been true. The only difference today, however, is that firms are no longer in control either of information about their operations or the means to disperse it (Figure 3.4: The Free Flow of Information, p56):

“Technology is aiding the uprising, empowering consumers to do much more to make themselves heard. Now, with the proliferation of online video, they can be seen as well. … And as the audience for more blogs and social-media sites such as Digg reach critical mass, it's easier than ever for consumers to wallpaper the Web with their customer-service nightmares.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Business Week Online
Insider Newsletter
February 21, 2008
********************
Consumer Vigilantes
Memo to Corporate America: Hell now hath no fury like a customer scorned
by Jena McGregor
http://newsletters.businessweek.com/c.asp?694483&c55a2ee820194f0f&55

Friday, April 4, 2008

Strategic CSR - Stakeholders

The article in the url link below reports a recent academic study that debates the relative advantages of a shareholder versus stakeholder perspective on firm ownership (Issues: Stakeholder Relations, p138):

“Although the study finds much to like about stakeholder-oriented companies, it does unearth one downside: Consumers can be harmed by the higher prices charged by stakeholder firms. Higher prices enable these firms to put into practice the often-costly governance structures that benefit people other than stockholders.”

While not providing any surprises in terms of the different cultural expectations placed on managers in different countries:

“… one survey of managers in various countries has shown just how divergent opinion can be on the question of "whose company is it?" In Japan, 97% of those surveyed said a company exists for all stakeholders, compared with 83% in Germany, 78% in France, 76% in the United States and 71% in the United Kingdom. … Specifically, only 3% of Japanese managers said companies should maintain dividend payments to stockholders even if it means the company has to lay off workers, compared with 41% in Germany, 40% in France, and 89% in both the United States and the United Kingdom.”

The article does highlight some results that are not taken-for-granted within the business community:

“People tend to think about the governance issue "in terms of workers versus owners, although there is more to it than that. It's usually believed that if a company is earning ever-higher profits and is generally doing better, its workers are somehow worse off. But that is not the case. Often, when it comes to stakeholder-oriented firms, both the company and workers can do better simultaneously. But consumers are worse off, so not everyone benefits."”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

'Whose Company Is It?' New Insights into the Debate over Shareholders vs. Stakeholders
Published: October 17, 2007 in Knowledge@Wharton
It is perhaps the core question in the ongoing debate over corporate governance: Does the corporation exist for the benefit of shareholders, or does it have other, equally important stakeholders, such as employees, customers and suppliers? A new study by Wharton finance professor Franklin Allen and two colleagues does not claim to provide a definitive answer, but it does show the various benefits of the stakeholder approach. It also demonstrates that the issue is not as settled as some researchers and business people in the United States, United Kingdom and other shareholder-oriented nations might think.
http://knowledge.wharton.upenn.edu/article/1826.cfm

Thursday, April 3, 2008

Strategic CSR - Alcoa

The article in the url link below highlights the progressive steps on issues related to recycling (largely in response to heavy criticism) being taken by the drinks industry (Issues: Environmental Sustainability, p171):

“Alcoa (NYSE:AA) announced [in January] that it has established a goal to raise the industry’s used beverage can (UBC) recycling rate in North America from its current 52% rate to 75% by 2015.”

In addition to the public criticism that is driving this effort, the steps by Coca-cola in recent months are also helping the industry see the positive financial benefits to reclaiming as much as possible of the raw materials necessary to make aluminum cans:

“Recycled aluminum is identical to smelted aluminum, except that it takes only 1/20 of the energy to make it. Less energy means reduced greenhouse emissions. And aluminum can be recycled over and over again, unlike many other materials. When an aluminum beverage can is recycled, it does something few other containers can do: it reappears back on the shelf, probably in 60 days or less, as a brand new soda can. That's because the can's aluminum materials are specially engineered for 100% recycling, with no waste and a minimum of energy input.”

What I was surprised at, however, was how little the baseline recycling rate had changed over the past 15 years and, therefore, how relatively high it had been in the past:

“In the U.S. aluminum beverage can market of over 1.5 million metric tons per year, about 800,000 tons of UBCs are currently being recycled. Wittbecker said that the U.S. recycling rate has fallen steadily from its high of 68% in 1992. In comparison, Brazil and Japan report phenomenal recycling rates of nearly 95% and 92%, respectively, and the global average is 60%.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

CSRwire Press Release
1.22.2008 - 02:20pm ET
Press release from: Alcoa Inc.
Alcoa Sets Goal to Raise North American Aluminum Beverage Can Recycling Rate from 52% to 75% by 2015
Call to Action for Aluminum Industry Leaders to Collaborate on Goal
http://www.csrwire.com/News/10787.html

Wednesday, April 2, 2008

Strategic CSR - Social Entrepreneurs

The article in the url below is an interesting commentary on social entrepreneurs and describes how more of them are pursuing their goals within a for-profit, rather than non-profit, framework (Issues: Profit, p200):

“The process is being pushed forward by a new breed of social entrepreneurs who are administering increasing doses of bottom-line thinking to traditional philanthropy in order to make charity more effective.”

What I found most interesting about the article, however, was a short paragraph that highlights the value of scale in promoting notable social change:

“Very few nonprofits get big. Only 144 of the more than 200,000 nonprofits established since 1970 had grown to $50 million or more in revenue by 2003, according to a study published last year by the Bridgespan Group, a nonprofit consulting firm that advises philanthropies.”

This is where the limitations of philanthropy, non-profit organizations, and even social entrepreneurs begin to emerge, and where the power of for-profit business to effect social change becomes apparent. It is only when large firms adopt a stakeholder perspective driven by the goal of maximizing long term value that society as a whole will be better off. Not to diminish the value of the non-profit sector, but scale is crucial for broad social change.

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

A Capitalist Jolt for Charity
By STEVE LOHR
2119 words
24 February 2008
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2008/02/24/business/24social.html

Tuesday, April 1, 2008

Strategic CSR - Economic Growth

The article in the url below is too long to summarize easily, but I wanted to forward it because I think it is worth reading. The focus of the article (actually a review of three recently published books) is the inflated importance of economic growth in our society through ever-expanding production and consumption. The author doesn’t ask if this economic model is sustainable, because it is clear from his writing that he is convinced it is not. Rather, his goal is to question why our society has evolved in this way and what it might take for us to reconsider. A couple of quotes convey the author’s argument effectively:

“… to raise the worldwide standard of living up to the level now prevailing in Portugal (the last country on the list of the richest thirty) would quadruple world economic output over the next fifty years.”

“Industrial society is roughly 250 years old: make the last ten thousand years equal to twenty-four hours, and we have been producing consumer goods and CO2 for only the last thirty-six minutes. Do the same for the past 1 million years of human evolution, and everything from the steam engine to the search engine fits into the past twenty-one seconds. If we are not careful, hunting and gathering will look like a far more successful strategy for survival than economic growth.”

In short, the author poses the question:

“What would it mean to live in a no-growth economy?”

His implicit answer is that we have no choice but to find out.

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Fear of fallowing: The specter of a no-growth world
Harper's Magazine
Review
by Steven Stoll
March 2008, pp88-94
http://www.steadystate.org/Files/Harpers_on_EE.pdf