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


Sunday, March 29, 2009

Strategic CSR - Recycling

The article in the url below discuses the pros and cons of a radical recycling program called Pay-As-You-Throw (PAYT):

“With PAYT, residents are charged based on how much garbage they generate, often by being required to buy special bags, tags or cans for their trash. Separated recyclables like glass and cardboard are usually hauled away free or at minimal cost. … The EPA said that about 7,100 cities and towns were using PAYT in 2006, up from 5,200 in 2001.”

The obvious incentive is to minimize disposed waste by maximizing the amount of waste each household recycles. In spite of the plan’s apparent common sense, however, implementing it is proving to be problematic. In particular, is the debate over whether pollution costs should be borne by the individual (based on the amount disposed) or society (based on the idea that comprehensive and efficient waste disposal is a public good):

“About three-quarters of the nation's households still have unlimited disposal service. In some communities, they pay a flat annual fee. In others, local property taxes cover the tab so residents aren't aware of the cost, making the service seem free.”

The idea that free waste disposal is a ‘right’ is causing backlash in communities that have tried to introduce a PAYT system:

“Illegal dumping has cropped up in about 20% of such communities, according to a 2006 U.S. Environmental Protection Agency report. Local officials also complain about variations of the so-called Seattle stomp (named after one of the first PAYT cities), where homeowners try to beat the system by compacting huge amounts of trash into a single can or bag.”

Nevertheless, with waste disposal costs set to rise significantly in the near future, some communities are still keen to experiment with PAYT:

“Under the Plymouth [MA] system, the town would still handle recyclables such as plastic and yard waste free, but trash would be accepted at the transfer stations only in special purple plastic bags purchased at local merchants for up to $1.25 each, depending on size. The town would get a cut of the bag sales, and residents would also pay a $65 annual fee, with the amount reduced to $40 for seniors.”

Although, at present, this plan has stalled due to public resistance:

“Mr. Hammond, [Plymouths’] public works director, says the garbage debate has been an eye opener. "A lot of people don't want to recycle," he says. "They just want to throw everything in the bin."”

Take care
Dave

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

Currents: Kicking the Cans --- Plymouth, Mass., Wrestles With 'Pay-As-You-Throw' Trash Fees
By Robert Tomsho
1328 words
29 July 2008
The Wall Street Journal
A12
http://www.wsj.com/article/SB121729506485991917.html

Thursday, March 26, 2009

Strategic CSR - Carbon Tax

The article in the url below suggests that a carbon tax will not necessarily lead to a reduction in carbon emissions:

“In 1991, Norway became one of the first countries in the world to impose a stiff tax on harmful greenhouse gas emissions. Since then, the country's emissions should have dropped. Instead, they have risen by 15%.”

The argument extends to the example of Europe’s cap-and-trade market for carbon credits:

“Regulators cushioned industry in the early years of the system, giving them little incentive to improve. As a result, emissions have crept up 1% a year since 2005. In the U.S., the Senate voted down cap-and-trade legislation in July, won over by arguments that the system would hurt industry and boost consumer prices.”

These examples are countered with the experiences of Sweden and Denmark, “both of which introduced a carbon tax, have reduced their greenhouse gas emissions by 14% and 8% respectively since 1990 while maintaining growth,” although this progress occurred in conjunction with other carbon reduction policies.

While the article makes clear that Norway’s efforts mean that the country’s level of emissions is significantly below what they would otherwise have been, it also points out that reversing emissions growth at a macro level will require much more radical efforts than have so far been attempted:

“Norwegians are used to paying high prices at the pump: a gallon of gasoline costs around $9 to $10, and about 6% of the price comes from the carbon tax. Yet since two-thirds of Norwegians live in the countryside, they pay up and keep driving.”

Have a good weekend.
Dave

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

Currents -- Environment: An Exhausting War on Emissions --- Norway's Efforts to Contain Greenhouse Gases Move Forward -- and Backfire
By Leila Abboud
1419 words
30 September 2008
The Wall Street Journal
A15
http://online.wsj.com/article/SB122272533893187737.html

Wednesday, March 25, 2009

Strategic CSR - De Beers

The article in the url below presents a case study of the positive impact that De Beers has had in Africa, in general, and Botswana, in particular:

“There is also no question, though, that Botswana was greatly aided by something else: De Beers's own sense of -- to use the current term of art -- corporate social responsibility.”

The author argues that, unlike many other firms that have extracted Africa’s resources (and continue to do so today), De Beers sought to build sustainable operations by building the local infrastructure that would also ensure the country’s development:

“Practically from the start, it entered into a 50-50 joint venture with the government; about a decade ago, it also sold the government a 15 percent stake in the company. … It has also built roads, hospitals and schools in Botswana; worked to help the country deal with H.I.V. and AIDS; and been involved in and paid for a hundred other things that have helped make Botswana an African success story.”

The author is quick to point out that this was not a charitable act by De Beers, but helped ensure the firm also continued to succeed:

“Botswana's citizens need roads -- but so does De Beers, to transport its diamonds. De Beers needs a healthy work force, so its emphasis on H.I.V. awareness and treatment is clearly in its self interest. Indeed, a more prosperous Botswana helps De Beers in every way imaginable, not least by providing a stable environment in which it can do business.”

The remainder of the article tracks the firm’s evolution in relation to the development of the diamonds industry and the role of the current CEO (appointed in 2006) in shaping the firm’s CSR profile:

“In the two years he's been the chief executive, Mr. Penny has become a proselytizer for what he likes to call ''beneficiation'' -- which is a fancy word for doing well while doing good. … He went on to say that every company doing business in Africa needed to practice this kind of enlightened stewardship if it hoped to succeed over the long haul.”

Take care
Dave

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

Diamonds Are Forever In Botswana
By JOE NOCERA
1769 words
9 August 2008
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2008/08/09/business/worldbusiness/09nocera.html

Sunday, March 22, 2009

Strategic CSR - FedEx

I will be traveling over the next two to three weeks. I intend to continue sending the Newsletters during this time, but am unsure of my internet access. As such, apologies in advance for any missed Newsletters. Regular service should return by the middle of April!

The article in the url below provides an update on FedEx’s 2003 plan:

“… to replace the company's 30,000 medium-duty trucks over the next 10 years.”

According to the article, FedEx operates the largest fleet of hybrid electrical trucks in the world:

“The vehicles get about 40% better gas mileage and emit 96% less "particulate pollution" than FedEx's regular medium-duty trucks.”

This achievement is not as impressive as it sounds, however. Rather than closing in on its target of 30,000 trucks, FedEx had only 172 on the road at the end of last year. In spite of the best of intentions, FedEx’s commitment to the market has not encouraged other firms to invest in the technology (which would lower unit price across the board):

“[Mitch Jackson, FedEx's director of environmental affairs and sustainability], 44 and a FedEx lifer, figured that other companies would realize the ultimate cost savings and start placing orders for test vehicles. They didn't -- in large part because of the initial sticker shock. Priuses and other passenger hybrids carry a 20% to 25% price premium over comparable nonhybrids; the engines that Mercedes and the Cleveland-based Eaton Corp. produced for FedEx upped costs 75%.”

In addition, in spite of initial promise, the federal government has refused to provide additional incentives, with fuel economy standards for commercial trucks only being introduced last year.

FedEx’s goal of replacing all its 30,000 delivery trucks with hybrid vehicles is still in place. Its timeline, however, is being revised upwards.

Take care
Dave

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

Green Business: FedEx's Hybrid-Truck Program Stalls
Why FedEx's ambitious goal of putting 30,000 hybrid vehicles on the road by 2013 has stalled.
From: Issue 129
October 2008
Page 101
By: Melanie Warner
http://www.fastcompany.com/magazine/129/green-business-truck-stop.html

Friday, March 20, 2009

Strategic CSR - Google

The articles in the two urls below announce Google’s support for a project to bring internet connections to the half of the world’s population that currently does not have access:

“The search engine has joined forces with John Malone, the cable television magnate, and HSBC to set up O3b Networks, named after the "other 3bn" people for whom fast fibre internet access networks are not likely to be commercially viable.”

Rather than focus on connecting homes to the telecommunications network in each country, the coalition of firms is working to try and establish the network itself:

“They will today announce an order for 16 low-earth orbit satellites from Thales Alenia Space, the French aerospace group, as the first stage in a $750m (£426m) project to connect mobile masts in a swath of countries within five degrees of the equator to fast broadband networks.”

Once in place, the infrastructure will reduce the cost of internet provision, while also improving quality and reliability.

Have a good weekend.
Dave

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

Google backs space-age project to connect 3bn to net via satellite
By Andrew Edgecliffe-Johnson in New York
426 words
9 September 2008
Financial Times
London Ed1
01
http://www.ft.com/cms/s/0/ee2f738c-7dd0-11dd-bdbd-000077b07658.html
Archived at:
http://www.iterasi.net/openviewer.aspx?sqrlitid=sy59pbbkokig8rjyb5l8nq

Space offers high-speed Net access to Africa
Edgecliffe-Johnson, Andrew
717 words
9 September 2008
Financial Times
Europe Ed1
23
http://www.ft.com/cms/s/0/591d172a-7de1-11dd-bdbd-000077b07658.html
Archived at:
http://www.iterasi.net/openviewer.aspx?sqrlitid=d9seealcfeie3tk-ycplmw

Wednesday, March 18, 2009

Strategic CSR - Ownership and CSR

The article in the url below makes some interesting points regarding the threat to an organization’s long term mission from the dilution of ownership caused by public listing, but is also a bit of a polemic:

“Stewardship means a sense of responsibility for that which you own and handle every day. It implies that the business should be around for generations, and that the owner is responsible for handing it on to the next generation in better shape than he or she inherited it.”

The author makes sizable assumptions about the motivations of executives, directors, and shareholders of public firms, as well as the consequences of these motivations for the long term health of the organization, which lead the reader to the position he is advocating:

“With the separation of ownership from control in the listed company, stewardship does not disappear, but it does erode. In US markets particularly, the chief executive is judged by shareholders on his or her dependability in “hitting the numbers” – or meeting quarterly earnings targets. There is little room for sentimentality about where the company has come from or whether it will still be around in its current form for the next generation.”

Rather than ownership (private, family owned businesses are just as likely to be managed inefficiently as public companies are likely to be focused on the short term), however, I think that the more important distinction in terms of a threat to the organization’s mission is between different kinds of shareholders (Figure 1.4: The Shareholder Shift—From Investor to Speculator, p14). While investors are more likely to take a longer term perspective, speculators/gamblers take a short term position on whether the share price will rise or fall, irrespective of whether or not it deserves to rise or fall.

Take care
Dave

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

Essay: Ownership and sustainability – Are listed companies more responsible?
Owners used to be stewards of their company’s future, but this idea has faded in modern publicly-listed companies.
Mark Goyder
July 14, 2008
http://www.ethicalcorp.com/content.asp?ContentID=6004

Monday, March 16, 2009

Strategic CSR - The Daily Show vs. CNBC

For those of you who missed Jon Stewart’s lambasting of CNBC on The Daily Show last week, his interview with Jim Cramer (host of Mad Money, http://www.cnbc.com/id/15838459) last Thursday is compelling TV:

http://www.thedailyshow.com/full-episodes/index.jhtml?episodeId=220533

As usual, Stewart employs comedy to great effect. In addition, however, he confronts Cramer with an honesty and directness that you rarely see on current affairs TV in the U.S. Stewart articulates succinctly the behavior of Wall Street that got us into this mess, but also skewers Cramer (and CNBC) for becoming part of the problem, rather than being the journalists they purport to be. As a result, the interview is both entertaining and uncomfortable to watch because Stewart so completely undermines what it is that must get Cramer out of bed every morning to do his show.

Take care
Dave

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

Friday, March 13, 2009

Strategic CSR - Google

The article in the url below outlines a business service run by Google for its staff. Started in 2004, the service is one of the many famous perks of working for Google. Beyond convenience, however, another reason why the firm introduced the scheme was to reduce the number of cars its employees use to commute to and from work:

“Now, four years later, about 1,200 staff ride the internet company's buses every day.”

Rising fuel costs and commute times in certain areas are increasing the popularity of buses, pushing other firms (such as Microsoft) also to introduce similar services:

“Google and Microsoft's buses are technology playgrounds. Both companies' vehicles have free WiFi, so passengers can check e-mail while they commute, and power outlets for those tecchies who can not do without their gadgets.”

Recent reports indicate that some of Google’s perks are being cut as a result of the economic downturn. Which perks are cut and how stringent the cuts are, will be somewhat indicative of Google’s underlying priorities.

Have a good weekend.
Dave

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

Sit back, relax and enjoy the ride . . . to work
By Rhymer Rigby
732 words
27 May 2008
Financial Times
USA Ed1
12
http://us.ft.com/ftgateway/superpage.ft?news_id=fto052620081502011638

An additional article of relevance to this Newsletter:

Perk Place: The Benefits Offered by Google and Others May Be Grand, but They're All Business
Published: March 21, 2007 in Knowledge@Wharton
Free gourmet food, 24-hour gym, yoga classes, in-house doctor, on-site haircuts, dry cleaner, nutritionist, swimming pool ... .These are just some of the perks Google -- and many other organizations -- offer employees. Companies have their reasons, of course: They want to attract and retain the best knowledge-workers they can, help them work long hours by feeding them gourmet meals on-site and handling time-consuming personal chores, and show them that they are valued members of the team. But, as Wharton faculty point out, there may be a potential downside to all this largesse.
http://knowledge.wharton.upenn.edu/article/1690.cfm

Wednesday, March 11, 2009

Strategic CSR - Advertising

The article in the url link below adopts a provocative stance regarding the emotive issue of advertising to children (Issues: Advertising, p151; Brands, p153). On the one side of the argument is the knee-jerk, easy-to-defend position adopted by many campaigners:

“Whenever we conduct research with consumers into whether they think companies should be able to target promotional messages directly at children the overwhelming reaction is that this is something that no responsible company would do. … Bring in anything that could be construed as marketing in schools and the arguments intensify.”

On the other side, however, is a more subtle argument:

“Marketing to children is certainly something that needs to be carefully considered and controlled, and any activity in schools doubly so. Leading companies that take their responsibilities in this area seriously have developed detailed guidelines for how to market to children and in what circumstances, and these are strictly enforced. … But to suggest that companies should not communicate with children at all is narrow-minded and shortsighted – not to mention deeply impractical: do you rule out billboard advertising altogether?”

The advantage of this argument is that it is more likely to lead to engagement with firms and the advertising industry, rather than forcing them onto the defensive. And, it is genuine engagement, backed-up by effective oversight, that is most likely to lead to a sustainable solution:

“The potential to effect positive change holds true across all child-friendly brands. Messages on bullying, or the environment, or online safety that come from a cool brand – like Hello Kitty – can have far more impact than the strictures of parents and schools.”

Take care
Dave

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

BrandWatch focus: marketing to children – Why brands should sell to kids
To say that brands should not promote their products ignores the positive ways companies can influence young people
Giles Gibbons
July 16, 2008
http://www.ethicalcorp.com/content.asp?ContentID=6013

Monday, March 9, 2009

Strategic CSR - SRI funds

The short article and corresponding graphics in the url below provide some interesting statistics regarding the recent performance of Socially Responsible Investment mutual funds (Issues: Investing, p184):

“Socially responsible investing, such as avoiding tobacco, defense, or other stocks for ethical reasons, is increasing in popularity among individual investors. The assets of these funds hit $202 billion in 2007. In the recent downturn, their returns have declined less than the broader market's.”

It is interesting in the ‘Activism vs. the Market’ graph (the last one) that, while SRI funds did not perform as well as the S&P 500 in a rising market (3-5 years ago), they have held their value better than the S&P 500 in the more recent declining market. Such lower volatility is something that should appeal to investors and, perhaps, indicates more fundamentally sound organizational management.

Take care
Dave

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

DO-GOOD INVESTMENTS ARE HOLDING UP BETTER
By Tara Kalwarski
183 words
14 July 2008
BusinessWeek
15
Volume 4092
http://images.businessweek.com/ss/08/07/0703_numbers/index.htm

Friday, March 6, 2009

Strategic CSR - Bottled Water

The article in the url below reports a dramatic recent fall in the sales of bottled water:

“Sales of the world's best-known brands, … have tumbled in some countries as weakening economies take a toll on household incomes and consumers become more concerned about the environmental impact of throwing away the plastic packaging of a liquid that can be drunk for free.”

Growth in the industry is only 1% in the year to September:

“This compares with growth of 11 per cent over the same period last year, and more than 21 per cent in 2006.”

I would like to think this drop in sales is a result of increasing environmental awareness. It will be interesting, therefore, to see whether or not sales recover when the economic situation improves.

Have a good weekend.
Dave

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

Sales of bottled water go flat as consumers return to the tap
By Jenny Wiggins
395 words
15 September 2008
Financial Times
London Ed1
17
http://www.ft.com/cms/s/0/763c04d0-82bc-11dd-a019-000077b07658.html

Thursday, March 5, 2009

Strategic CSR - Eco Police

The article in the url below offers some hope for the future. It explains how children are beginning to hold their parents accountable for their behavior regarding sustainability issues (Issues: Environmental Sustainability, p171):

“Ms. Ross's children are part of what experts say is a growing army of ''eco-kids'' -- steeped in environmentalism at school, in houses of worship, through scouting and even via popular culture -- who try to hold their parents accountable at home. … They pore over garbage bins in search of errant recyclables. They lobby for solar panels. And, in a generational about-face, they turn off the lights after their parents leave empty rooms.”

One of the people interviewed for the article claims that an important driver of this behavior is children’s unfiltered view of the world:

“One of the fascinating things about children is that they don't separate what you are doing from what you should be doing.”

Given that the children featured in the article are more sensitive to issues surrounding the environment than their parents, where are they learning about this? The article claims that one important source of information is the classroom:

“[My son will] come over and turn [the light] off and say, 'Every day is Earth Day,' '' Ms. Schmidt said. ''He learned it at school.”

Other sources cited in the article include the movies (e.g., Wall-E) and Girl Scouts. As 12 year old Elly puts it:

“I wouldn't be happy if [my parents] bought an S.U.V. because they're not fuel efficient, and they pollute more than other cars.”

Take care
Dave

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

Pint-Size Eco-Police, Making Parents Proud And Sometimes Crazy
By LISA W. FODERARO
1469 words
10 October 2008
The New York Times
Late Edition - Final
27
http://www.nytimes.com/2008/10/10/nyregion/10green.html

Monday, March 2, 2009

Strategic CSR - Chiquita

The article in the url link below provides an update on the costs to Chiquita (Issues: Litigation, p245) resulting from the firm’s admission last year that it made protection payments to a Colombian paramilitary group:

“Although Chiquita voluntarily disclosed payments it made to a Colombian to the US Department of Justice in March 2007, the company paid a $25 million fine. It continues to face numerous cases in civil court from the families of victims allegedly murdered by the paramilitaries paid by Chiquita.”

Instead of being commended for their transparency, however, and in spite of being urged to come forward by the Department of Justice, it seems that the only prosecutions being made are against self-confessed transgressor firms. And, they are being hit hard:

“… the top five recent penalties levied in the US foreign corrupt practices act arena were in cases involving voluntary disclosure, including $44 million from Baker Hughes and $28.5 million from Titan Corporation.”

It is difficult to know what the ‘best’ course of action is. While it is fair to expect Chiquita to be punished for the bribes it paid, it is also clear that such punitive action by the government, compounded by the civil litigation Chiquita faces, will only serve to discourage others from coming forward. If the goal is to eradicate the practice (in this case, bribery), it is easy to see that this approach will likely result in less success, not more:

“But Alexandra Wrage, president of TRACE International, a non-profit membership association that specialises in anti-bribery due diligence reviews and compliance training, says many ultimately conclude it was the wrong decision to voluntarily disclose. Wrage says many self-reporters don’t believe they have received any kind of measurable benefit, while facing stiff downsides to the decision, including fines, remedial action and vast reputational damage.”

Take care
Dave

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

Chiquita – Voluntary disclosure’s banana skin
Coming clean on bribes doesn’t seem to really pay off for US companies
Lisa Roner, North America Editor
July 16, 2008
http://www.ethicalcorp.com/content.asp?ContentID=6011