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, December 3, 2010

Strategic CSR - See you in January!


This will be the last CSR Newsletter of the Fall semester.
Have a great holiday season and I will see you in January!


The article in the url below contains a graphic (http://images.fastcompany.com/magazine/148/now-22-infographic-inline.jpg) that depicts the total spending of the seven countries that have invested the most in renewable energy:

As 3,500 global leaders in the energy field gather in Montreal to discuss trends and growth, we calculate which countries have earned the biggest bragging rights. Here, we compare the seven that have made the largest investments in alternative energy.

As well as an overall figure, the graphic breaks down each country’s spending into different kinds of renewable energies (i.e., the percentage spent on wind, solar, biofuels, and so on). The 5 year growth rate in investment for each country is listed, as well as the percentage of total energy capacity that these investments constitute.

Have a good weekend.
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


"Who's Really Investing in Alternative Energy?"
Fast Company Magazine
Issue: 148 | Date: September, 2010 | By: Emily Benton

Wednesday, December 1, 2010

Strategic CSR - Caring Capitalism

The article in the url below focuses on the growing wealth of successful Indian entrepreneurs (such as Vinod Khosla, “the billionaire venture capitalist and co-founder of Sun Microsystems”) and their willingness to invest it in philanthropic enterprises. One quote, in particular, from the article stood out:

Mr. Khosla said his experience with microfinance had helped shape his views on the best way to tackle poverty. He has invested in commercial microfinance lenders and has donated to nonprofit ones, and he said that moneymaking versions had grown much faster and reached many more needy borrowers.

The article and the philosophy behind the quote draws heavily on the Bottom-of-the-Pyramid (BOP) work of C.K. Prahalad (Issues: Profit, p271):

By backing businesses that provide education loans or distribute solar panels in villages, he says, he wants to show that commercial entities can better help people in poverty than most nonprofit charitable organizations.

While there is certainly an important role for social entrepreneurs in CSR (Issues: Social Entrepreneurship, p189), however, I think it is overly optimistic to think businesses should exist primarily to solve social problems.

Business is the solution to market problems/opportunities that carry social value as a consequence. Firms maximize social value by combining scarce and valuable resources to meet market needs, while considering the interests of a broad range of stakeholders and planning to maximize sustainable shareholder returns over the long term. Firms can often use their expertise to aid in meeting social goals, but this should not be their primary concern. Governments and nonprofits also play important social roles where gaps in the market occur.

The danger in using for-profit organizations primarily to solve social problems is that the profit motive can easily corrupt the founding purpose. This is becoming increasingly evident in the microfinance industry (see Strategic CSR – Microfinance, September 27, 2010, below) in which the article reports that Khosla has just profited “about $117 million” from SKS Microfinance’s recent IPO (see also, more recently, Strategic CSR – Microfinance, November 22, 2010).

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


In Capitalism, Sun's Co-Founder Sees a Pathway to Help the Poor
By VIKAS BAJAJ
1287 words
6 October 2010
The New York Times
Late Edition - Final
1


From: David Chandler {msbbe096}
Sent: Monday, September 27, 2010 11:45 AM
Subject: Strategic CSR - Microfinance

The article in the url below suggests the dangers of success for the microfinance business model (Issues: Microfinance, p245):

SKS Microfinance, India's largest lender to the poor, aims to raise about $350m this month by selling a 21.6 per cent stake in an initial public offering expected to spark a wave of listings by equity-strapped Indian microfinance companies.”

While the high rates of repayment and community structure present a real opportunity for microfinance institutions to be profitable (or at least self-sustaining), the profit-maximization pressures (higher interest rates and lower loan qualification standards) that accompany a public listing carry the potential to undermine the social-entrepreneurship microfinance goals (Issues: Social Entrepreneurship, p189):

“Muhammad Yunus, the Nobel Peace Prize-winning founder of Bangladesh's Grameen Bank - the world's most famous microlender - has criticised the commercialisation of the industry, saying profit-oriented microlenders are little different to the loan sharks they once set out to replace.”

The possibility for corruption quickly arises as the pursuit of profit spreads across the sub-units of the organization:

“SKS, which says it has 7m borrowers in 19 Indian States, also plans to boost its revenues through alliances with large companies to distribute their products - such as mobile phones and water purifiers - even as it provides rural consumers with the microloans needed to buy the items.”

The article in the second url below shows the success and rapid growth of microfinance organizations, such as SKS, in India:

“For the last three years, outstanding loan portfolios of Indian micro-finance institutions have grown by 65 per cent annually, according to the World Bank, with total loans of about $2.5bn to about 22.6m households.”

As well as reinforcing the threats:

“Typical loans average between $200 and $250, and carry rates of about 28 per cent - lower than money-lenders, albeit still expensive when compared with commercial bank rates.”

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


SKS Microfinance plans to raise $350m in IPO
By James Fontanella-Khan in Mumbai and Amy Kazmin in New Delhi
418 words
21 July 2010
Financial Times
Asia Ed1
17

New networks help ease debt dilemma
Kazmin, Amy
603 words
21 July 2010
Financial Times
Asia Ed1
17

Monday, November 29, 2010

Strategic CSR - Emotion

What role does emotion play in integrating CSR throughout a firm’s strategic perspective and day-to-day operations? In particular, how can a firm accommodate the range of emotions triggered as its various stakeholders interact with the firm and the products and services it generates? The article in the url below presents an interesting take on the value of integrating emotions into operations processes and systems:

Emotions are far more predictable and manageable than many operations managers believe.

Allowing for predictable emotional responses from customers and building customer service processes that accommodate them, results in very different outcomes, both for the customer and the firm:

Let’s say you have bought a laptop and within the first month of owning it, it fails three times. Your third call will be a more emotionally intense call than your first. But will the laptop manufacturer assign a more seasoned service agent to deal with you? Or will you simply be led through the same complaint process you experienced with your first call? … You do not need to train all employees in the same way. Rather you can identify the emotions they most frequently deal with and train them to deal with those.

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Find a way into the heart of customers
Delves Broughton, Philip
820 words
9 November 2010
Financial Times
USA Ed1
12
or

Wednesday, November 24, 2010

Strategic CSR - Worldometer

This is a fun website that is similar to the one we highlight in the second edition of Strategic CSR (Part II, p149 and Strategic CSR – Time, below):


Worldometers is part of the Real Time Statistics Project, which is managed by an international team of developers, researchers, and volunteers with the goal of making world statistics available in a thought-provoking and time relevant format to a wide audience around the world. Chief project coordinator is currently Sir Thomasson.

The website, which is available in 32 different languages, details legitimate sources (http://www.worldometers.info/sources.php) and features an interesting “statistic of the month,” such as the number of toxic chemicals released by industries this year:


Happy Thanksgiving!
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


From: David Chandler {msbbe096}
Sent: Friday, January 25, 2008 7:55 AM
Subject: Strategic CSR - Time

Dear All,

This link takes you to a very interesting website called the “World Clock”:


The description below came from the circular e-mail that was forwarded to me and describes the purpose of the site very well:

“Most clocks are happy just to tell us what time it is. But there are different ways of showing elapsed time, and they are not all chronological. This Web site, which keeps track of nearly every measurement of human progression, is a prime example. If you're a student of statistics, you will have your fill, from the number of traffic accidents since the beginning of 2007, to the number of marriages or divorces for the same period. What makes this site so interesting is that you can see it change before your eyes. Some figures, such as the world population, are in a state of constant change, while others show a much slower increase. Other categories include the number of barrels of oil pumped, cars and computers produced, and the variable temperature of the earth shown in billionths of a degree. If you wish to break down the information into shorter periods, you can view the figures broken down monthly, weekly, daily, and even now (where the counts will start from the moment you click on it).”

Have a good weekend.
David

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

Monday, November 22, 2010

Strategic CSR - Microfinance

If you have been following recent developments in the Indian microfinance industry (Issues: Microfinance, p245), you will know that it appears to be falling apart as quickly as it expanded. The articles in the two urls below indicate the extent of the crisis and outline some of the reactionary legislative responses that are being put in place.

While the first article focuses on the damage being done in India:

India's rapidly growing private microcredit industry faces imminent collapse as almost all borrowers in one of India's largest states have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor. The crisis has been building for weeks, but has now reached a critical stage. Indian banks, which put up about 80 percent of the money that the companies lent to poor consumers, are increasingly worried that after surviving the global financial crisis mostly unscathed, they could now face serious losses. Indian banks have about $4 billion tied up in the industry, banking officials say.

The second article looks at the contagion effects in nearby countries:

Bangladesh, the birthplace of the global microcredit movement, has decided to cap interest rates for microloans at 27 per cent, the latest sign of a growing regulatory backlash in south Asia against an industry once hailed as a "magic bullet" to cure poverty. The move came just days after India's microfinance industry agreed to a voluntary 24 per cent interest rate cap on its microloans in the southern state of Andhra Pradesh, where local authorities have accused the industry of charging usurious rates and employing coercive collection tactics.

Spurred by high repayment rates and the success of organizations such as Grameen Bank (Case-studies: Grameen Bank, p246), for-profit firms quickly realized they could make money in microfinance, as well as bolster their CSR credentials, as long as they remained relatively more virtuous than the loan sharks that had previously dominated the market.

‘Relatively more virtuous than loan sharks,’ however, is not setting a very high bar. It certainly does not make a firm virtuous by any objective measure. While there are definitely higher costs involved in making smaller loans to a larger number of customers over geographically dispersed areas, it is not clear how charging up to 50% interests rates achieves the social mission of alleviating poverty (which is the driving force behind microfinance). What is happening, in reality, is relaxed standards for loan issuance on the part of firms seeking to grow and higher indebtedness on the part of already poor borrowers who are increasingly incentivized to borrow.

For-profit firms, naturally, face pressures to grow and be more profitable than not-for-profit organizations. What is vital in order for firms to retain the societal legitimacy necessary for long term survival, however, is that this growth is pursued within a sustainable business model. While having politicians encouraging loan recipients to stop making repayments is far from ideal, the Indian and Bangladesh microfinance firms that are suffering as a result have only themselves to blame.

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Microcredit Is Imperiled In India By Defaults
By LYDIA POLGREEN and VIKAS BAJAJ
1393 words
18 November 2010
The New York Times
Late Edition - Final
5

Bangladesh caps microfinance rates at 27%
By Amy Kazmin in New Delhi
485 words
10 November 2010
Financial Times

Friday, November 19, 2010

Strategic CSR - Measuring CSR (ISO 26000)

On November 2, the International Standards Organization (ISO) launched the long-awaited ISO 26000 Guidance on Social Responsibility (Issues: Accountability, p303; Case-studies: ISO 26000, p305). The ISO press release announcing the launch is in the first url below, while the second url below contains the American National Standards Institute’s press release that accompanied the launch in the U.S. The goal of the guidance, as stipulated by ISO, is to build:

“… a truly international consensus on what social responsibility means and what core subjects need to be addressed to implement it. … [ISO 26000] is based on broad stakeholder input, including from developing countries, business, government, consumers, labour, nongovernmental organizations and others.

Prior Newsletters have documented the complicated political negotiations that led us to this point (see Strategic CSR - ISO 26000, January 25, 2010). Integral to the five-year long process has been the broad, multi-stakeholder, multi-national participation, which can be seen both as its strength (inclusive and widespread adoption) and also its weakness (ambiguity and compromise):

At the last meeting of the ISO/WG SR, in July 2010, there were 450 participating experts and 210 observers from 99 ISO member countries and 42 liaison organizations involved in the work.

The resulting document and convoluted rhetoric reflect the complex negotiations. For example, in spite of many participants pushing for ISO 26000 to be a certifiable standard (like the ISO 14001 standard for environmental management systems), due to political disagreements among participants, the ISO 26000 is instead a “guidance standard” that is intended to be a broad guide, rather than a certifiable standard.

Confused? You should be.

In spite of this confusion, the claims accompanying the guidance/standard are ambitious:

“ISO 26000 provides guidance for all types of organization, regardless of their size or location, on:
1.    Concepts, terms and definitions related to social responsibility
2.    Background, trends and characteristics of social responsibility
3.    Principles and practices relating to social responsibility
4.    Core subjects and issues of social responsibility
5.    Integrating, implementing and promoting socially responsible behaviour throughout the organization and, through its policies and practices, within its sphere of influence
6.    Identifying and engaging with stakeholders
7.    Communicating commitments, performance and other information related to social responsibility.”

An overview of the guidance is presented graphically by ISO (and is not as difficult to follow as it first appears):


It will be interesting to see how ISO 26000 is implemented in practice. While many are concerned it will become a de facto standard if it becomes widely adopted and firms begin expecting compliance from suppliers, others are concerned that the document is insufficiently precise to be of value in implementation.

Have a good weekend
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


ISO Multimedia News Release
ISO launches ISO 26000 guidance standard on social responsibility
November 2, 2010

American National Standards Institute
The U.S. Certification body ANSI's U.S. press release about ISO 26000 is at:

Wednesday, November 17, 2010

Strategic CSR - Measuring CSR (Walmart)

If anyone doubted Walmart’s commitment to sustainability as a vehicle to further minimize costs and promote lower prices (see CSR Newsletter from November 5, 2008, below), the firm’s decision to develop a Sustainability Index (profiled in this ABC News video) should convince:


Walmart now asks each of its 100,000+ suppliers the following 15 questions:

Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions
1.    Have you measured your corporate greenhouse gas emissions?
2.    Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)?
3.    What is your total annual greenhouse gas emissions reported in the most recent year measured?
4.    Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets?

Material Efficiency: Reducing Waste and Enhancing Quality
1.    If measured, please report the total amount of solid waste generated from the facilities that produce your product(s) for Walmart for the most recent year measured.
2.    Have you set publicly available solid waste reduction targets? If yes, what are those targets?
3.    If measured, please report total water use from facilities that produce your product(s) for Walmart for the most recent year measured.
4.    Have you set publicly available water use reduction targets? If yes, what are those targets?

Natural Resources: Producing High Quality, Responsibly Sourced Raw Materials
1.    Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety?
2.    Have you obtained 3rd party certifications for any of the products that you sell to Walmart?

People and Community: Ensuring Responsible and Ethical Production
1.    Do you know the location of 100 percent of the facilities that produce your product(s)?
2.    Before beginning a business relationship with a manufacturing facility, do you evaluate the quality of, and capacity for, production?
3.    Do you have a process for managing social compliance at the manufacturing level?
4.    Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements?
5.    Do you invest in community?

While this project is still in its early stages and these questions are voluntary with no verification process in place, from what I have heard and read, the effort is genuine and, because of Walmart’s reach, promises to shift the focus of the retail sector as a whole.

In addition, what is interesting about this project, and what distinguishes it from Walmart’s prior sustainability work (see below), is that this Index carries the potential to increase short term costs. The scale of the task is huge (a label on every product Walmart stocks that allows customers to compare the relative environmental costs using a common scale). As such, the fact that Walmart is willing to take on this issue, defining its value to the firm and its suppliers over the long term, is an important step forward in Walmart’s commitment to CSR-related issues.

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


From: David Chandler {msbbe096} [mailto:David.Chandler@phd.mccombs.utexas.edu]
Sent: Wednesday, November 05, 2008 1:17 PM
Subject: 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
David

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


An ethics lesson from an unlikely quarter
Skapinker, Michael
829 words
28 October 2008
Financial Times

Asia Ed1
11

Monday, November 15, 2010

Strategic CSR - Measuring CSR (Lifecycle Pricing)

One of the most pressing and contentious areas of the CSR debate today revolves around the following question: How do we measure CSR?

How can we develop an accurate and consistent measure of CSR that allows stakeholders to evaluate the social and environmental impact of different products and firms, and compare them to other products and firms (i.e., compare apples with oranges along common metrics)? If we can’t measure CSR, how can we tell whether and when it matters? I have been thinking about this issue for a while now and will focus the next few Newsletters on some interesting and innovative steps firms are taking to address it.

One of the primary goals of measuring CSR should be to move towards some form of product lifecycle pricing.

Lifecycle pricing supports the idea that we need to develop an economic model that is no longer founded on waste by accounting for externalities in pricing (i.e., similar to the idea of Pigovian taxes). In other words, the price of a product should not only include the cost of production, but also include the costs associated with replenishing the raw materials used and disposing/recycling of the waste after consumption. Attempts to put a price on carbon reflect this process (either through a carbon tax or some form of cap-and-trade), while firms’ efforts to develop carbon footprints (e.g., http://www.walkerscarbonfootprint.co.uk/ and http://www.nytimes.com/2009/01/22/business/22pepsi.html) provide a possible means of implementation.

If all firms are forced to incorporate externalities into the price of a finished product or service, many of the cheap items in our disposable economy will become significantly more expensive and businesses will be incentivized to produce sustainable alternatives. The market remains the most effective means we know of allocating scarce and valuable resources in ways that maximize social outcomes. Rather than subsidizing specific industries, adequately pricing the ‘true’ cost of a product allows for a less distorted competition of ideas in the marketplace that should also generate socially responsible outcomes.

The articles in the two urls below contain examples of firms that are leading the way in this area. The article in the first url details attempts by the apparel industry to incorporate lifecycle product information into all the clothing we buy:

More than 200 clothing manufacturers and retailers have joined together to create an industry-wide sustainability rating, the Eco Index, which will assess the environmental impact of products along their entire life-cycle chain. … The Eco Index, currently at the “beta” stage of development, provides three types of tools – guidelines, indicators and metrics. These can be used together or separately, and enable any company to participate, whether seasoned in sustainability or not. Each tool assesses a product’s impact within six life-cycle stages: materials; packaging; product manufacturing and assembly; transport and distribution; use and service; and end of life. … The stakeholder engagement process should be complete by the end of 2010, with the formal phase 1 index to launch in early 2011.

The article in the second url looks at Whole Foods’ attempts to assess and support sustainable seafood products:

“[Whole Foods Market Inc.] on Monday launched a new color-coded rating program — with the help of Monterey Bay Aquarium and Blue Ocean Institute — that measures the environmental impact of its wild-caught seafood. … Similar to a stoplight, seafood is given a green, yellow or red rating. A green rating indicates the species is relatively abundant and is caught in environmentally friendly ways. Yellow means some concerns exist with the species' status or the methods by which it was caught. And a red rating means the species is suffering from overfishing, or the methods used to catch it harm other marine life or habitats. … Whole Foods also announced Monday that it will end sales of red-rated species by Earth Day 2013. The company has already phased out a number of such products.

It is encouraging to see these firms collaborating on industry-wide standards that move us closer to understanding the holistic impact of our current economic system and business practices. What is not clear (and is not necessarily relevant) is the extent to which consumers want this information and whether they are willing to act on it.

Take care
David


Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/



Eco Index: How green are your clothes?

Manufacturers and retailers are developing an ambitious rating system for the ecological impact of their clothes
Jeni Bauser
Ethical Corporate Magazine
October 15, 2010

Whole Foods to label seafood's sustainability
Green, yellow and red stickers to show if food is endangered or overfished
Sarah Skidmore
msnbc.com
September 17, 2010