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


Friday, November 28, 2008

Strategic CSR - Qik

The article in the url below demonstrates further how evolving communications technology in an online world raises the profile for CSR for firms (Issues: Internet, p237; Media, p249):

“Qik's attraction is that it takes a feed from the viewfinder of a camera phone and streams the images live over the internet to a web page. Viewers can type comments and questions on to the screen, which the phone user can then see and answer.”

The Qik software enables anyone with a cell phone to upload live video and distribute it globally in real time. The article discusses the implications of this for media outlets (news, in particular), but I think the real danger lies for the entities who are the potential news stories. While this has broader political and social implications, therefore, Qik also further jeopardizes firms’ reputations, which can be quickly damaged by anyone with a cell phone and internet connection:

“"What if there had been Qik-enabled cell phones during the Burma protests a few months ago? Snap your fingers and it's there on whatever channel," says [Carla Thompson, an analyst with the Guidewire Group].”

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

Qik broadcasts shine light on workings of the world: A small piece of mobile software is proving useful for capturing live images in every corner of life
By Chris Nuttall in San Francisco
912 words
1 August 2008
Financial Times
London Ed1
12
http://www.ft.com/cms/s/0/58e9f0ae-5f62-11dd-91c0-000077b07658.html
or without registration at:
http://www.ftchinese.com/story.php?lang=en&storyid=001021144

Wednesday, November 26, 2008

Strategic CSR - Ethical consumers?

The article in the link below questions the assumption of many CSR advocates that consumers care sufficiently about business ethics and CSR to sustain a fundamental shift in economic model (Issues: Ethics, p227). In essence, consumers will say one thing in response to survey questions about CSR, then turnaround and make their purchase decisions based on different principles:

“For most people to choose an “ethical” product over a regular product, that product must not cost any more than an ordinary one, it must come from a reputed brand, require no special effort to buy or use, and it must be at least as good as its alternative.”

In spite of a rise in availability of ethical products and producers willing to sell them:

“For the majority of consumers, cheap products of decent quality remain the popular choice.”

If true, then:

“… what incentives do businesses have in maintaining responsible or ethical standards?”

While the article addresses the issue of reputation risk for firms, it is at its most convincing in arguing that the threat of regulation represents the strongest incentive for firms to reform ahead of consumer demands that they do so (Chapter 1: The Rational Argument for CSR, p17). Because consumers are unlikely to voluntarily sacrifice their current standard of living for a future, uncertain benefit (the article argues), governments will eventually be forced to act on their behalf:

“… because the future will have to be one in which governments and regulators will have to take a much tougher line on the way externalities are priced by business.”

It is not the most forceful (or uplifting) argument for sustainable change, but it might be the best one that we have got!

Happy Thanksgiving!
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

Ethical consumers – Cop-out at the checkout
Consumers have shown that they will not push companies to be responsible
Chandran Nair
September 8, 2008
http://www.ethicalcorp.com/content.asp?ContentID=6074

Monday, November 24, 2008

Strategic CSR - Finance

The article in the url below by Martin Wolf of the FT offers two important comments on the recent credit crisis and the self-inflicted wounds of the financial industry (Issues: Finance, p180; Investing, p184). First, is the idea that industries that fail to regulate themselves and consistently overstep the bounds of acceptability set by society face regulation (Chapter 1; A Rational Argument for CSR, p17):

“More regulation is on its way. After frightening politicians and policymakers so badly, even the most optimistic banker must realise this. The question is whether the additional regulation will do any good.”

Second, Wolf offers a stinging rebuke to an industry that should expect an even stronger social backlash because of its poor performance relative to standards in other industries:

“Yet why, I ask, should this industry have apparently failed to improve its standards of performance over the past century? After all, almost every other industry has done so. Consider how confident we are that the food we buy will not poison us. Yet adulterated food was once a threat. … [The banking industry’s] purely operational performance is now impressive. But competition does not work well in finance. The "product" of the financial industry is promises for an uncertain future, marketed as dreams that can readily become nightmares. Customers are readily swept away by exaggerated promises, irrational beliefs, misplaced trust and sheer skulduggery. So, too, are practitioners: basing risk management on limited data and inadequate models is a good example. Emotions count wherever uncertainties loom. Boeing would not survive if the aircraft it built fell out of the sky. Yet in the financial industry, huge blunders are also almost always made in common. If everybody is in the dance nobody is to blame and, in any case, governments, horrified by the consequences of a collapsing financial system, will come to the rescue.”

Wolf, however, is pessimistic that anything will change. Regulators, he argues, are likely to focus on correcting past mistakes, rather than preventing future ones, and firms and individuals are unlikely to feel sufficient “pain” to deter future recklessness.

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

Why financial regulation is both difficult and essential
By Martin Wolf
1,035 words
April 15 2008
Financial Times
London Ed1
Page 11
http://us.ft.com/ftgateway/superpage.ft?news_id=fto041520081354588929

Friday, November 21, 2008

Strategic CSR - Nike

It is characteristic of the media that good news takes a back seat to scandal, but the article in the url below is worth highlighting as an example of how far Nike has come regarding CSR (Issues: Cultural Conflict, p160). The article, buried deep in the sports pages of my local paper, reports Nike’s voluntary disclosure of the mistreatment of workers at the factory of a Nike sub-contractor in Malaysia:

“… including squalid living conditions, garnished wages and withheld passports of foreign workers.”

Nike’s response, I think, is impressive:

“Nike said all workers are being transferred to Nike-inspected and approved housing … All workers will be reimbursed for any fees and going forward, the fees will be paid by the factory. All workers will have immediate access to their passports and any worker who wishes to return home will be provided return airfare.”

Those executives that remain unconvinced of the value of CSR, however, are likely to remain skeptical as long as such proactive behavior remains unrecognized, while the slightest transgression is plastered all over the front pages.

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

Nike finds major violations at Malaysian factory
By SARAH SKIDMORE
AP Business Writer
415 words
1 August 2008
02:04 PM
Associated Press Newswires
http://www.newsvine.com/_news/2008/08/01/1713691-nike-finds-major-violations-at-malaysian-factory

Wednesday, November 19, 2008

Strategic CSR - Dr. Hauschka

The article in the url below profiles the parent (WALA Heilmittel) of the natural cosmetics firm, Dr. Hauschka:

“… the company's roots are in herbal medicine. WALA was founded in 1935 by Rudolf Hauschka, a Viennese chemist who sought to develop remedies using only natural ingredients. In 1967, it added the skin care line, named after the founder, who died two years later.”

Dr. Hauschka is experiencing success today as consumers increasingly seek out socially and environmentally friendly products:

“Sales of WALA Heilmittel, the maker of Dr. Hauschka, have more than doubled in the last five years, to nearly $150 million, about 8 percent of that from the United States, where it also sells herbal remedies. The 73-year-old company, which labored for decades in obscurity, now finds itself in the sweet spot of a booming market for green cosmetics.”

The firm’s level of social responsibility extends far beyond its product line, however, appearing to have successfully integrated a CSR perspective throughout all aspects of operations. The company is run:

“… almost as a collective, with all the profits either plowed back into operations or handed out to the 700 workers.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

Garden Is a Seedbed For Green Cosmetics
By MARK LANDLER
1307 words
28 June 2008
The New York Times
Late Edition - Final
3

Monday, November 17, 2008

Strategic CSR - Green Noise

The article in the url below introduces the concept of “green noise”:

“green noise” -- static caused by urgent, sometimes vexing or even contradictory information [about the environment] played at too high a volume for too long.”

The idea of “green noise” adds value to the debate. While terms like “greenwashing” describe the conduct of firms, “green noise” presents a consumer perspective on the exponential growth in information on issues related to the environment and climate change that is often contradictory. The overall effect is to obfuscate, rather than clarify, whether deliberately or with good intentions:

“An environmentally conscientious consumer is left to wonder: are low-energy compact fluorescent bulbs better than standard incandescents, even if they contain traces of mercury? Which salad is more earth-friendly, the one made with organic mixed greens trucked from thousands of miles away, or the one with lettuce raised on nearby industrial farms? Should they support nuclear power as a clean alternative to coal?”

In outlining the concept of “green noise” the article also highlights the effect of this information overload on consumer behavior:

“… consumers surveyed in 2007 were between 22 and 55 percent less likely to buy a wide range of green products than in 2006. The slipping economy had an effect, but message overload appeared to be a major factor as well.”

There is an interesting relationship between the amount of information and effective decision making—the idea that more information is better, but too much leads to paralysis and, consequently, bad or non decisions:

“Diane Tompkins, a founder of the Curious Company, a market research firm based in San Francisco … has conducted focus groups to investigate the psychological barriers to taking action for the sake of the environment. The activist groups ''believe that, surely, if I just gave them one more reason why they should do it, then they would,'' she said. ''But the fact is, people are not motivated by more facts. That can just reinforce their feeling of helplessness.''”

Take care
Dave

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

That Buzz In Your Ear May Be Green Noise
By ALEX WILLIAMS
1540 words
15 June 2008
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2008/06/15/fashion/15green.html

Friday, November 14, 2008

Strategic CSR - Google

The two articles in the urls below demonstrate the power of the internet to re-shape the way information is communicated around the globe (Chapter 1: Globalization and the Free Flow of Information, p20; Issues: Internet, p237). This phenomenon will continue to evolve in ways that we have not yet even begun to imagine (at least, those of us who do not work for Google):

“You can Google to get a hotel, find a flight and buy a book. Now you may be able to use Google to avoid the flu.”

The philanthropic arm of the internet search company (http://www.google.org/) has released a new service (http://www.google.org/flutrends/) that will track internet search terms related to the flu nationally (e.g., “cough” or “fever”) and use this information to help identify potential outbreaks of the illness:

“It displays the results on a map of the U.S. and shows a chart of changes in flu activity around the country. The data is meaningful because the Google arm that created Flu Trends found a strong correlation between the number of Internet searches related to the flu and the number of people reporting flu symptoms.”

This information is powerful because of the speed with which it identifies early trends to which government agencies and health providers can then react:

“Tests of the new Web tool from Google.org, the company's philanthropic unit, suggest that it may be able to detect regional outbreaks of the flu a week to 10 days before they are reported by the Centers for Disease Control and Prevention.”

I believe that firms are just beginning to appreciate the ways in which these communication tools will affect their operations and reputations. What seems apparent, however, is that the affect will be dramatic and that firms that are not transparent and accountable to their stakeholders will suffer as a result.

Have a good weekend.
Dave

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

Sniffly Surfing: Google Unveils Flu-Bug Tracker
By Robert A. Guth
1070 words
12 November 2008
The Wall Street Journal
D1
http://sec.online.wsj.com/article/SB122644309498518615.html

Aches, a Sneeze, a Google Search
By MIGUEL HELFT
1267 words
12 November 2008
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2008/11/12/technology/internet/12flu.html

Thursday, November 13, 2008

Strategic CSR - Labor Laws in China

The article in the url below charts the improving labor laws in China (Issues: Cultural Conflict, p160; Wages, p204). In spite of a new Labor Contract Law (introduced in January 2008), however, formal protest and workers’ rights are still sensitive issues in China and reform is slow:

“While China's rising number of middle-class malcontents are quick to protest one-off threats to their relatively comfortable existences - such as a nuclear plant or rail project nearby - they are otherwise coddled by government policies. Workers' grievances, by contrast, range from exploitation by employers to administrative discrimination against migrants who have moved to coastal factory towns from poor provinces in the interior. … They also have a lot less to lose than China's professional classes, making any independent labour movement forged outside the official All China Federation of Trade Unions one of the greatest potential threats to the Communist party's grip on power.”

Although union organization is still strongly discouraged by authorities, there is room for organizations (such as Chunfeng, featured in the article) to advise workers on their legal rights:

“Despite the restrictions, Chunfeng has never been busier. "Before this year, we handled about 10 cases a month," says Mr Zhang, who turns 34 this year. "Now it's up to about 30."”

This issue gained increased prominence over the summer with the story that Wal-Mart has finally agreed to collectively-bargained wage rises for all employees at its stores in China.

Take care
Dave

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

China's factory workers gain recognition for grievances
By Tom Mitchell in Shenzhen
1110 words
30 July 2008
Financial Times
Asia Ed1
07
http://www.ft.com/cms/s/0/03fc6bc2-5d9f-11dd-8129-000077b07658.html

Wednesday, November 12, 2008

Strategic CSR - Home Depot

In the absence of regulated standards in many areas of CSR-related products, the article in the url link below describes the steps firms are taking to ensure their progress on this issue is not lost on their customers (Issues: Advertising, p151; Brands, p153):

“It's all part of a new trend spinning out from the current wave of eco-chic. Perhaps taking a cue from the U.S. Agriculture Dept.'s eye-catching, consumer-friendly, official labels for organic food, increasing numbers of non-food related stores and brands are introducing official-looking symbols and signs to promote their products. Their strategy is clear: To market their eco-friendliness, and to quickly and effectively communicate how socially responsible they are.”

Home Depot’s new “earth-friendly products” icon is below as an example:

http://images.businessweek.com/story/07/popup/0501_green_labeling_1.jpg

“Already, the label is associated with more than 2,500 products, ranging from compact fluorescent light bulbs to organic plants in biodegradable pots. Many, but not all, are verified by Scientific Certification Systems, an independent standards development and certification company.”

The sudden increase in various forms of environmental and social responsibility-type labels is designed to benefit from a growing consumer market:

“Each of these companies are looking to tap the growing numbers of socially responsible consumers. They have realized the power that the nearly five-year-old, USDA organic label wields among customers (products bearing the "organic" label represented a healthy $14.6 billion in total annual U.S. sales in 2005, the latest figures available from industry group Organic Trade Assn., up 17% from the year before).”

The problem, of course, is that the increased variety of symbols, marks, and icons, not to mention the huge variance in standards that underpin what is deemed to be ‘sustainable,’ ‘ethical,’ or ‘responsible,’ leads to further confusion. More important is the potential for abuse of consumer interest in CSR and products that support a responsible and sustainable business model, and also the dilution of meaning of what official labels (where they exist) mean over time:

“… while graphic designers, brand strategists, and consumer advocates alike agree that a proliferation of socially responsible corporations is healthy news for the environment, they're also cautioning that shoppers be wary or at least well-informed of the claims that each new, brand-specific eco-label conveys.”

Take care
Dave

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

Business Week Online
Insider Newsletter
Saturday, May 5, 2007
********************
READING THE NEW ECO LABELS
Retailers and manufacturers of non-food items are creating their own seals of approval for earth-friendly goods
by Reena Jana
Marketing May 2, 2007
http://www.businessweek.com/stories/2007-05-02/reading-the-new-eco-labelsbusinessweek-business-news-stock-market-and-financial-advice

Monday, November 10, 2008

Strategic CSR - Union Carbide

The article in the url below describes how the gas leak that occurred in Bhopal, India almost 25 years ago has still not been cleared up. As a result, the disaster continues to generate negative headlines for Union Carbide (and Dow Chemicals, which bought Union Carbide in 2001) on the front page of the NYT (Issues: Human Rights, p234):

“Hundreds of tons of waste still languish inside a tin-roofed warehouse in a corner of the old grounds of the Union Carbide pesticide factory here, nearly a quarter-century after a poison gas leak killed thousands and turned this ancient city into a notorious symbol of industrial disaster.”

Putting aside any arguments of moral responsibility, it is amazing that a firm like Dow does not just pay what it takes to make this problem go away (Chapter 1: A Rational Argument for CSR, p17):

“The toxic remains have yet to be carted away. No one has examined to what extent, over more than two decades, they have seeped into the soil and water … Nor has anyone bothered to address the concerns of those who have drunk that water and tended kitchen gardens on this soil and who now present a wide range of ailments, including cleft palates and mental retardation, among their children as evidence of a second generation of Bhopal victims.”

Over the summer, the Supreme Court delivered a decision on the 1989 Exxon Valdez case. Both that case and the Bhopal disaster reflect poorly (to say the least) on the strategic decisions taken by the executives of both companies. At least, however, Exxon has accepted some degree of responsibility for its role in the Valdez oil spill.

Take care
Dave

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

Decades Later, Toxic Sludge Torments Bhopal
By SOMINI SENGUPTA
1858 words
7 July 2008
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2008/07/07/world/asia/07bhopal.html

Friday, November 7, 2008

Strategic CSR - Mobile phones

The article in the url below outlines the steps mobile phone companies are taking to develop products that appeal to consumers at the bottom-of-the-pyramid (Issues: Profit, p200):

“A study by Gartner, a technology research group, of related security issues estimated mobile phone payment systems could be available to 15 per cent of the world's 3bn unbanked people by the end of this year.”

The availability of mobile phones and the level of current technology make banking and financial services particularly amenable to the needs of BOP consumers. Often, consumers in this target market do not have bank accounts, but need to take out a loan, pay bills, or send money to friends and relatives, all of which can be done using their mobile phone:

“Mobile technology has the potential to offer cheap no-frills banking, at low risk, because transactions are monitored in real-time, on widely-used, high-quality infrastructure.”

This article came from a supplement in the FT on Sustainable Banking. Other articles in the same supplement can be found at:

http://www.ft.com/reports/sustainablebanking2008

Have a good weekend.
Dave

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

FT REPORT - SUSTAINABLE BANKING 2008
Mobile phone operators revolutionise cash transfers
Tieman, Ross
739 words
3 June 2008
Financial Times
Surveys SBA1
04
http://us.ft.com/ftgateway/superpage.ft?news_id=fto060220081321472830

Wednesday, November 5, 2008

Strategic CSR - Wal-Mart

The article in the url below deals with the prospect of firms’ CSR activity contracting during the expected economic recession:

“It is easy to imagine corporate social responsibility being the first fad that companies abandon during the downturn.”

This might be true, except for the fact that Wal-Mart’s CEO, Lee Scott, has chosen now to reaffirm his firm’s commitment to raising the profile of sustainability throughout operations:

“Lee Scott, Wal-Mart's chief executive, told a meeting of 1,000 Chinese suppliers in Beijing: "I firmly believe that a company that cheats on overtime and on the age of its labour, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honour its contracts, will ultimately cheat on the quality of its products."”

The more I see and hear Scott speak on this issue, the more I am convinced he is genuine and, more importantly, is articulating an effective business case for CSR. In making this case, he is driven less by morals or ethics (a subjective minefield from which no firm emerges unscathed) and more by focusing on maximizing the long term value added by his organization:

“Hearing Wal-Mart say this still produces splutters of disbelief. … But Mr Scott has been talking this way since 2005, when he promised Wal-Mart would "sell products that sustain our resources and the environment".”

Two issues remain. First, it is not clear how comprehensive this ethos is throughout Wal-Mart and, as a result, what happens when a decision consistent with Scott’s message to “sustain our resources and environment” increases costs, rather than decreases them? And, second, Wal-Mart’s business model still relies on fostering economic growth through mass consumption and disposal/waste. The second point, in particular, might be a question for society rather than Wal-Mart (although, given the firm’s size, it is becoming hard to distinguish the two), but it still poses a threat to Scott’s claims to sustainability over the long term.

Take care
Dave

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

An ethics lesson from an unlikely quarter
Skapinker, Michael
829 words
28 October 2008
Financial Times
Asia Ed1
11
http://us.ft.com/ftgateway/superpage.ft?news_id=fto102720081602378640

Tuesday, November 4, 2008

Strategic CSR - Equator Principles

The purpose of this Newsletter is to direct those of you interested in the Equator Principles (Issues: Finance, p180) to the article in the url link below:

“The Equator Principles are a set of social and environmental standards for project finance. Banks signed up to the principles pledge to consider the impacts a proposed project, such as a mine, might have on the local environment and communities. The banks promise to make action to address these impacts a condition of their lending money to the borrower, or project sponsor, such as a mining company.”

The invited debate between Johan Frijns of BankTrack (http://www.banktrack.org/) and Leo Johnson of Sustainable Finance (http://www.sflnet.com/) was designed to mark the fifth anniversary of the introduction of the Equator Principles in 2003. The debate highlights some of the key successes and remaining problems associated with the program.

Take care
Dave

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

Ethical Corporation: Not an oxymoron
By Invitation: Debate, project finance
The Equator Principles – Is it a happy fifth birthday for the Equator Principles?
No, still need to do better, says Johan Frijns, BankTrack. Yes, many happy returns, says Leo Johnson, director Sustainable Finance
July 7, 2008
http://www.ethicalcorp.com/content.asp?ContentID=5989