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, April 30, 2010

Strategic CSR - HBR

This month, Harvard Business Review is conducting an online forum titled ‘What Does Business Owe the World?’:

http://blogs.hbr.org/what-business-owes-the-world/

The forum is designed to complement the lead story in the April, 2010 issue of HBR titled ‘Leadership in the Age of Transparency’:

We believe managers need to think about social responsibility in terms of externalities. Externalities is an economics term which, as the link above tells you, is "an effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account. We believe companies that want to be seen as responsible should begin by addressing their externalities. They should take ownership of their impact. And, because attempting to so will put quite a lot on their plates, their efforts should probably end there as well.

In conjunction with the publication of the second edition of Strategic CSR, Bill and I were approached to write something for the forum. I thought you might be interested to see what I came up with and how it was received on the site:

http://blogs.hbr.org/what-business-owes-the-world/2010/04/why-arent-we-stressing-stakeho.html

Have a good weekend.
David

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

Wednesday, April 28, 2010

Strategic CSR - Gas Tax

Everything intelligent that I have seen written about the ill-fated cap-and-trade legislation that is weaving its way slowly through Congress and will likely be watered down even further (How is it possible to water down something that is already very weak?) says that a gas tax would be a far more effective and efficient way to alter consumer behavior. The arguments against cap-and-trade are numerous and are outlined in an interview with Thomas Crocker, who first thought up the idea (http://online.wsj.com/article/SB125011380094927137.html).

The challenge, of course, is to make a tax politically viable, because attaching the word ‘tax’ to any policy proposal in the U.S. is equivalent to killing it off. One of the best answers I have seen in terms of how to make such a tax palatable is to offset any revenue raised with a rebate of some form to consumers. If consumers understand that the net effect of the tax is zero, then the case against the tax loses much of its potency.

The article in the url below presents a comprehensive approach to achieving these goals. It is innovative, flexible, and a good start, which, of course, is why no-one in Washington is likely to pay any attention to it.

Take care
David

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

How to make a petrol tax politically viable
By Michael Levine and Mark Roe
991 words
7 July 2009
USA Ed1
09
or

Monday, April 26, 2010

Strategic CSR - Microfinance

The article in the url below discusses some of the problems that have resulted from the recent explosion in growth of the microfinance industry (Issues: Loans, p188). To some degree, microfinance is becoming a victim of its own success.

In general, the microfinance industry has been altered by the influx of for-profit firms that have learnt from successful nonprofits to develop a business model that relies on the high repayment rates that are typical within the sector. With profit as a stronger focus, however, these new microfinance lenders are increasing interest rates and introducing much more liberal criteria for extending credit.

The primary focus of this article, however, is on the continued success of traditional moneylenders in India (who charge much higher interest rates), who are flourishing in spite of the success of microfinance. It turns out that the source of the high repayment rates for microfinance is also the source of the microlenders’ ongoing success:

“Some microfinance borrowers say they need village moneylenders to help them pay their debts on time. … Peer pressure to pay back microfinance loans is intense, because microlenders almost always require borrowers to join small, tightknit groups. If one member defaults, none can get another loan. Microloans have a stellar repayment rate -- close to 100% -- and some analysts believe a hidden reason is the stopgap provided by moneylenders.”

Borrowers are willing to put up with higher interest rates in order to get easier access to credit and avoid the social ramifications of failing to meet their microfinance commitments:

“… the moneylenders are virtually indistinguishable from the microlenders. They distribute knock-off versions of the microlenders' passbooks. Some use the same weekly repayment structure and door-to-door service as the microlenders do. The difference, however, is that the moneylenders give loans faster, without asking the women to form groups and serve as each other's guarantors, as microfinance lenders do in order to ensure a higher repayment rate. They also charge significantly more than the four microlenders serving the neighborhood.”

Take care
David

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

Microfinance grows along with rivals --- Small credit lines were supposed to trim use of high-interest loans in India's rural areas, but moneylenders flourish
By Ketaki Gokhale
1386 words
16 December 2009
The Wall Street Journal Asia
8
http://online.wsj.com/article/SB126055117322287513.html

Friday, April 23, 2010

Strategic CSR - Flash Mobs

In Strategic CSR, we use the phenomenon of flash mobs (http://www.flashmob.com/) as an example of why the revolution in global communications makes CSR a more immediate concern for firms today than ever before because it enables like-minded people to communicate and mobilize (Chapter 3: Environmental Forces Propelling Greater CSR, p56). Wikipedia defines a flash mob as:

a large group of people who assemble suddenly in a public place, perform an unusual and pointless act for a brief time, then quickly disperse. The term flash mob is generally applied only to gatherings organized via telecommunications, social media, or viral emails.

I am not normally a fan of Oprah (J), but, this video is one of the best examples of a flash mob I have seen. The key is to keep your eyes on the crowd, rather than the band, and watch as the mob spreads. It begins with the woman in blue in the middle at the front and slowly moves out to encompass the whole crowd. Oprah’s face is fun to watch as she gradually realizes what is happening:


Here's how they did it:


Have a great weekend.
David

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

Wednesday, April 21, 2010

Strategic CSR - Earth Day

It is Earth Day tomorrow (BTW: on Monday, PBS aired a great American Experience program on the history of Earth Day and the environmental movement in the U.S., http://www.pbs.org/wgbh/americanexperience/films/earthdays/).

With Earth Day in mind, I saw a very good article in yesterday’s NYT that presents “7 New Rules [for the environmentalist] to Live By’:

1. It's the climate, stupid.

2. You can never not do just one thing.

3. “Let them eat organic” is not a global option.

4. Frankenfood, like Frankenstein, is fiction.

5. “Green” energy hasn't done much for greenery -- or anything else.

6. “New Nukes” is the new “No Nukes.”

7. We are as gods and have to get good at it.

The author makes insightful, scientifically-grounded arguments with each point that are designed as reality checks for the more idealistic green advocates. Regarding organic food, for example, the author states that:

For affluent humans in industrialized countries, organic food is pretty much a harmless luxury. Although there's no convincing evidence that the food is any healthier or more nutritious than other food, if that label makes you feel healthier and more virtuous, then you can justify the extra cost. But most people in the world are not affluent, and their food budgets are limited. If they're convinced by green marketers that they need to choose higher-priced organic produce, they and their children are liable to end up eating fewer fruits and vegetables.

Stewart Brand’s work is referenced throughout (he of the 10,000 year clock, http://www.longnow.org/clock/) and it is his quote that is #7 on the list—essentially a call for humans to master the natural environment or perish as a result of what we have done to it:

Technological progress, not nostalgia or asceticism, is the only reliable way for greens’ visions of “sustainability” to be sustained. Wilderness and wildlife can be preserved only if the world's farmers have the best tools to feed everyone on the least amount of land. Solar power will be widely adopted only if there are breakthroughs that make it more efficient. Greenhouse gases will keep accumulating unless engineers build economical sources of low-carbon energy or develop techniques for sequestering carbon. And if those advances aren't enough to stop global warming, we'll want new tools for directly engineering the climate.

Take care
David

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

For Earth Day, 7 New Rules to Live By
By JOHN TIERNEY
1195 words
20 April 2010
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2010/04/20/science/20tier.html

Monday, April 19, 2010

Strategic CSR - Teaching Ethics

The article in the url below is a series of opinions in response to a problem posed at the top of the column:

THE PROBLEM: Last week Nassim Nicholas Taleb, author of The Black Swan, said: "I don't believe that ethics can be taught in class." He was speaking after the arrest of Raj Rajaratnam, the head of hedge fund Galleon Group, and two other alumni of his MBA class at Wharton. Have business schools paid enough attention to ethical questions? Or are ethics a personal matter?”

Responses from four experts from four different business schools are posted. The most insightful, I think, and the position I found to be the most persuasive, was expressed by Roger Martin, Dean of the Rotman School of Management at the University of Toronto:

Anything we know can be taught, but nothing can be learned without desire. Therein lays the business school dilemma. The academic world knows plenty about ethics and it is eminently teachable in a business class or any other class - as teachable as finance or strategy. But the magnitude of habit change following any course will be a function of the desire to learn and to integrate that learning into subsequent actions.

Take care
David

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


Is it possible to teach ethics to business school students?
938 words
28 October 2009
Financial Times
London Ed1
14
http://www.ft.com/cms/s/0/571d5ee8-c34b-11de-8eca-00144feab49a.html
or
http://www.rotman.utoronto.ca/rogermartin/FT_CanYouTeachEthics.pdf

Friday, April 16, 2010

Strategic CSR - Google

The article in the url below discusses the relative environmental impacts of using paper versus distributing information via the web:

“Many opinion formers argue that the trend towards greater use of electronic media can only bring environmental benefits. By cutting down fewer trees, creating less paper waste and through increased use of on-line media the world can only be a better place. I am not sure that I buy all of these arguments.”

While it is true that the manufacture of paper involves significant tree loss, and printing on that paper consumes energy and poisons (ink), online information exchange does not necessarily involve a lower environmental impact:

“Electronic media require massive global infrastructure not least to support access to the world-wide web and to appropriate technology to view information. The industry hasn't exactly raced to be transparent about the energy profile of the technology behind the internet.”

Ultimately:
“How can we compare, for example, the carbon profile of unique users viewing a web page with the carbon burden of a print run of equivalent reports?”

The author illustrates this issue with a lot of data regarding the energy usage of “massive data warehouses,” but also finds a way to make the issue accessible:

“Recent research has also highlighted that performing two Google searches from a desktop computer can generate about the same amount of carbon dioxide as boiling a kettle for a cup of tea.”

Google’s response to this debate is posted on the firm’s “official Google blog” at (http://www.googleblog.blogspot.com/2009/01/powering-google-search.html):

“We thought it would be helpful to explain why this number is *many* times too high. Google is fast — a typical search returns results in less than 0.2 seconds. Queries vary in degree of difficulty, but for the average query, the servers it touches each work on it for just a few thousandths of a second. Together with other work performed before your search even starts (such as building the search index) this amounts to 0.0003 kWh of energy per search, or 1 kJ. For comparison, the average adult needs about 8000 kJ a day of energy from food, so a Google search uses just about the same amount of energy that your body burns in ten seconds.”

Have a good weekend.
David

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


Paper versus the web – Is there a clear winner?
Leading consultant calls on the print industry to fight its 'green' corner
Mark Line
August 21, 2009
The Guardian

Wednesday, April 14, 2010

Strategic CSR - Bribery

The article in the url below contains some shocking (to me, at least) figures from a report by Transparency International (http://www.transparency.org/), widely regarded as the leading source of global data on bribery and corruption, regarding the extent to which bribery is an integral aspect of business in some parts of the world:

“Did you know that a global poll of business executives found two in five have been asked to pay a bribe when dealing with business institutions? Half of these estimated that corruption raised project costs by at least 10 per cent. One in five of the executives claimed to have lost business because of bribes by a competitor. More than a third felt that corruption was getting worse. Moreover, politicians and officials in emerging economies are estimated to receive bribes of between $20bn and $40bn annually - equivalent to some 20-40 per cent of official aid.”

The article also addresses the paradox that, while the Foreign Corrupt Practices Act (1977) is “the gold standard” for anticorruption legislation, the US is ranked only at 18th on Transparency International’s list of least corrupt nations:

“… in which 180 countries are ranked "in terms of the degree to which business people and country analysts perceive corruption to exist among public officials and politicians".”

Take care,
David

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


Worse evils exist than corruption
By Samuel Brittan
838 words
18 September 2009
Financial Times
Asia Ed1
09
http://www.ft.com/cms/s/0/85e294c4-a3d3-11de-9fed-00144feabdc0.html
or
http://www.ftchinese.com/story/001028972/en

Strategic CSR - Shareholder Rights

The article in the first url below reports a recent SEC rule change that reflects the growing powers the U.S. regulatory authorities are willing to grant to firm owners (shareholders) over managers. This rule, in particular, allows a greater say for shareholders in terms of CEO succession. The reforms:

“… will force companies to provide more information on the pay of executives and the background of boards. The decisions underscore a regulatory agenda by the SEC's new management, led by the chairman Mary Schapiro, that is increasingly moving towards empowering shareholders.”

The article in the second url below reports that the country often cited as most progressive on shareholder rights is the UK:

“The reason is that, unlike in the United States, British takeover law essentially handcuffs the board of a target company from doing anything to block a deal. No poison pills. No staggered boards. No changing the shareholder vote date. The potential for a C.E.O. or entrenched board to block a deal -- or otherwise act in its own self- interest -- is virtually nil. In other words, England is as close as any country gets to a true shareholder democracy. Any bid gets put to a vote, and all the board can do is offer an opinion.”

Although often championed by CSR advocates, however, this article makes a compelling argument that greater shareholder rights do not necessarily lead to optimal stakeholder outcomes:

“If the board lacks power to weigh in on the deal, that also means nobody with any clout is looking out for other stakeholders, like employees. Most mergers never live up to their hype, resulting in lower values and fewer jobs. So the question worth asking is: Shouldn't someone be looking further into the future?”

Take care
David

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


Activist targets CEO succession
By Francesco Guerrera and Joanna Chung in New York
434 words
18 December 2009
Financial Times
Asia Ed1
15
http://www.ft.com/cms/s/0/184ef728-eb4e-11de-bc99-00144feab49a.html
or
http://uk.finance.yahoo.com/news/activist-targets-ceo-succession-ftimes-6cb070848b0b.html

Do Stockholders Really Know What's Best?
By ANDREW ROSS SORKIN
975 words
17 November 2009
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2009/11/17/business/17sorkin.html

Strategic CSR - Carbon Sequestration

There is a lot going on in the informative article in the url below about climate change and carbon emissions reduction:

“The chief goal of European environmental policy is to curb fossil energy consumption. … These programmes cost billions - and probably achieve the exact opposite of what policymakers intend: the global extraction of coal, gas and oil shoots up instead of sinking.”

For this Newsletter, however, I want to focus on what the author has to say about carbon capture and sequestration. This is one of the areas scientists are working on to minimize the carbon emitted into the atmosphere from the consumption of fossil fuels (see the U.S. Department of Energy for an overview: http://www.fe.doe.gov/programs/sequestration/overview.html). I knew the technology was still underdeveloped and, intuitively, the idea seems too good to be true, but I had no idea the barriers to progress were as seemingly insurmountable as the author suggests:

“Burying carbon is easier said than done. The process of capturing CO from a chimney and turning it into a liquid consumes a third of the energy generated by burning the fuel in the first place. On top of that, the amount of storage volume required would be gigantic, as each carbon atom is joined by two oxygen atoms upon combustion - and they all need to be stored. Carbon captured from anthracite coal would occupy five times as much space underground as the coal itself; in the case of crude oil, three times the volume would be needed. According to estimates by the Intergovernmental Panel on Climate Change, the earth's depleted coal mines, oil and gas deposits, and natural caves will offer room for barely a 10th of the CO that would be generated by all the recoverable carbon resources.”

Take care,
David

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


How to resolve the green paradox
Hans-Werner Sinn
932 words
27 August 2009
Financial Times
Asia Ed1
07
http://www.ft.com/cms/s/0/2992000e-92a0-11de-b63b-00144feabdc0.html

Strategic CSR - Greenwash

Green Options (http://www.greenoptions.com/), “a community of individuals striving to protect the environment and live well,” has compiled a set of examples of how firms should not do environmental sustainability advertising:

http://www.greenoptions.com/wiki/great-greenwashed-advertising

All of these ads are by organizations or industry representative groups with dubious sustainability track records, yet who are trying to benefit from increased consumer interest in the environment and related issues.

‘Greenwash,’ which is defined by the environmental marketing organization Terrachoice (http://www.terrachoice.com/) as “the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service,” is an important part of the CSR debate. While firms increasingly try and benefit from growing consumer interest in this area, however, this phenomenon also reinforces the important role that stakeholders play in holding firms to account for their actions. Greenwash will only continue while it benefits firms to do so. To the extent that stakeholders (especially consumers) remain vigilant, educate themselves about specific issues, and are willing to act against firms that fail to meet expectations, then Greenwash will become more of a threat to survival, rather than an opportunity for profit.

Have a good weekend,
David

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