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


Monday, October 31, 2011

Strategic CSR - 7 billion

The article in the url below reports that, today, the United Nations estimates that the world’s population will surpass seven billion people (probably somewhere in India). See the World Population Clock for confirmation: http://www.worldometers.info/world-population/. The shock is not the number itself, but the speed at which the total has grown exponentially in recent years:

The first billion people accumulated over a leisurely interval, from the origins of humans hundreds of thousands of years ago to the early 1800s. Adding the second took another 120 or so years. Then, in the last 50 years, humanity more than doubled, surging from three billion in 1959 to four billion in 1974, five billion in 1987 and six billion in 1998.

The article goes on to question whether the planet can support this many people. The author reports plenty of good news to suggest, in theory, that the Earth can easily support its current population and even a much larger one:

Between 1820, at the dawn of the industrial age, and 2008, when the world economy entered recession, economic output per person increased elevenfold. Life expectancy tripled in the last few thousand years, to a global average of nearly 70 years. The average number of children per woman fell worldwide to about 2.5 now from 5 in 1950. The world’s population is growing at 1.1 percent per year, half the peak rate in the 1960s. The slowing growth rate enables families and societies to focus on the well-being of their children rather than the quantity.

In practice, however, there is also cause for concern:

Nearly half the world lives on $2 a day, or less. In China, the figure is 36 percent; in India, 76 percent. More than 800 million people live in slums. A similar number, mostly women, are illiterate. Some 850 million to 925 million people experience food insecurity or chronic undernourishment. … While the world produced 2.3 billion metric tons of cereal grains in 2009-10 — enough calories to sustain 9 to 11 billion people — only 46 percent of the grain went into human mouths. Domestic animals got 34 percent of the crop, and 19 percent went to industrial uses like biofuels, starches and plastics. … Already, more than a billion people live without an adequate, renewable supply of fresh water.

And, the future prospects are daunting:

The United Nations Population Division anticipates 8 billion people by 2025, 9 billion by 2043 and 10 billion by 2083. India will have more people than China shortly after 2020, and sub-Saharan Africa will have more people than India before 2040.

The conclusion, which is hardly news, is that we are growing at an unsustainable rate—not only in terms of numbers, but the amount of resources being consumed by those numbers and, more importantly, the way those resources are being consumed:

Human demands on the earth have grown enormously, though the atmosphere, the oceans and the continents are no bigger now than they were when humans evolved. … The mismatch between the short-term incentives that guide our political and economic institutions and even our families, on one hand, and our long-term aspirations, on the other, is severe.

The upshot is that, while we should be able to manage the world’s population growth; the reality is that we are shooting ourselves in the foot (or, I suppose, our 14 billion feet).

Friday, October 28, 2011

Strategic CSR - Green Tea Party

The article in the url below presents the case for a Green Tea Party. Building on the libertarian strain of politics that fuels much of the Tea Party debate today, the author argues that a similar distrust of government, together with a desire for meaningful market-oriented action, could form the basis for an environmental (or Green Tea) political party:

The GTP would not be for you if you think increasing Washington bureaucracy budgets will produce a cleaner environment. Since 1980, the Environmental Protection Agency's inflation-adjusted budget has been relatively flat, but air and water quality have improved. Most improvements came through cost-saving technologies in the private sector, not regulations. The GTP's platform would be that only prosperity and incentives can drive environmental improvements. The first plank: Wealthier is healthier. … The second plank: Incentives matter.

I am forwarding it because I like the play on words, but also because I found the arguments interesting:

Here are a few GTP environmental policies that make economic and common sense because they rely on market forces to discover what works:
• The GTP would make land management agencies such as the Forest Service, Park Service and Bureau of Land Management turn a profit on the federal estate.
• The GTP would tap water markets instead of tapping the U.S. Treasury.
• The GTP would establish tradable catch shares to halt the decline of ocean fisheries.

Ultimately (the article did appear in the Wall Street Journal, after all):

It is not enough to strut your stuff in clothes made of recycled materials while driving your hybrid to an environmental protest. And environmental quality cannot be bought simply by throwing more tax dollars and regulations at problems. The GTP would serve environmental quality, budget cuts and economic prosperity.

After searching for the article online, I found that this idea has been around for a while. It was featured in one of Thomas Friedman’s NYT columns (http://www.nytimes.com/2010/04/25/opinion/25friedman.html) and has its own website, manifesto (http://www.greenteaparty.us/), and international branches (http://www.melaniephillips.com/britains-green-tea-party). The slogan for the movement in the U.S. is:

Making a More Perfect Union―One Cup at a Time!

Wednesday, October 26, 2011

Strategic CSR - Human nature

The article in the url below is interesting because it reflects on a fundamental aspect of human nature – Are we essentially flawed beings who have to struggle against our innate tendencies in order to exist in a civilized society, or is ‘evil’ (immoral, unethical) behavior the exception and humans are preordained to be ‘good’?

I see reflections of this debate within the CSR community in relation to the fundamental role of for-profit firms (and all organizations) in society. Are firms (and the executives who work in them) essentially powers for good that occasionally commit transgressions, or are they essentially negative elements of society—freeing the individuals that work there to pursue short-term, self-centered gain under the cloak of group anonymity?

The article, which is an interview with the psychiatrist Theodore Dalrymple, focuses on the mass-shooting that occurred in Norway over the summer, but the discussion reflects on the motivations underlying human behavior more broadly:

The human impulse to explain the inexplicably horrific is revealing, according to Dr. Dalrymple, in two respects—one personal, one political. First, it says something about us that we feel compelled to explain evil in a way that we don't feel about people's good actions. The discrepancy arises, he says, ‘because [Jean-Jacques] Rousseau has triumphed,’ by which he means that ‘we believe ourselves to be good, and that evil, or bad, is the deviation from what is natural.’ For most of human history, the prevailing view was different. Our intrinsic nature was something to be overcome, restrained and civilized. But Rousseau's view, famously, was that society corrupted man's pristine nature. This is not only wrong, Dr. Dalrymple argues, but it has had profound and baleful effects on society and our attitude toward crime and punishment. For one thing, it has alienated us from responsibility for our own actions. For another, it has reduced our willingness to hold others responsible for theirs.

The idea that we have divorced behavior from responsibility has many applications in the CSR debate (both in terms of corporations and their stakeholders) that are an underlying theme of these Newsletters. It is connected to the belief that, as a society, we have moved away from valuing strong institutions that bind us and constrain our behavior within normative rules constructed over decades of social civilization (a broad, long-term focus), towards a society that is focused on the pursuit of individual happiness and self-indulgence (a narrow, short-term focus) and that any attempt to limit that pursuit is resisted.

I believe this shift against society and in favor of the individual is a significant barrier to meaningful progress in the CSR debate. Without the idea that society is more important than the individual, rather than the other way around, we lose what Dalrymple describes as our “transcendent purpose,” which governs our daily actions and, ultimately, guides our willingness to make personal sacrifice in the name of something larger than ourselves:

’After all,’ Dr. Dalrymple says, ‘having a very consistent worldview, particularly if it gives you a transcendent purpose, answers the most difficult question: What is the purpose of life?’

Monday, October 24, 2011

Strategic CSR - Nascar

The article in the url below about how “going green is good business for gas-guzzling Nascar”  leaves me torn. Part of me wants to laugh at attempts by Nascar to introduce green initiatives (up until 2007, Nascar cars were still driven on leaded gasoline) when the purpose of the sport is to burn through huge amounts of gasoline driving round and round in circles (i.e., going nowhere), while another part of me thinks that at least something is better than nothing:

While the core of the sport remains unchanged, Nascar, its teams, track operators and sponsors are employing an ambitious set of green initiatives that includes collecting used fuel, planting trees to offset carbon emissions, and deploying sheep to keep the infield grass short.

While it is fine for Nascar to focus on “cutting costs by recycling, conserving and generating its own energy,” it seems something else altogether for them to promote themselves as “environmentally friendly.” The business advantages (if they can get away with the greenwashing), however, seem self-evident:

Going green not only saves money [“tens of millions of dollars in costs”] that can be spent on drivers and cars, but it has also created new revenue by attracting sponsors to Nascar that want to trumpet their eco-friendliness to the millions of fans who watch races on television and at the track.

Nevertheless, such initiatives are gaining support among environmentalists because of Nascar’s widespread popularity:

[Activists] support these efforts not just because of the volume of resources consumed at stadiums and at arenas, but also because so many people watch sports and are likely to follow examples set by the players, teams and leagues. This may be particularly true at Nascar races, where the event itself is about consumption. … Indeed, the greening of Nascar is a sweeping undertaking because so many people attend so many races in so many places, at tracks that are turned into small cities with all the associated problems of garbage, water, power, sewage and air quality.

Thursday, October 20, 2011

Strategic CSR - Philanthropy

The article in the url below contains good news (Chapter 3: How Much Does CSR Matter? p64):

According to the Aspen Institute’s most recent Grey Pinstripes report, a biannual survey of business school education, 36 of the world’s business schools now offer philanthropy-related courses. The movement has also taken off at the undergraduate level. According to Campus Compact, a national coalition of universities and colleges that promotes civic engagement, there are approximately 100 courses offered across the country on the topic. Many classes give students a set amount of money that they can donate to local nonprofits in their community.

I found this statement interesting, though:

In the last few years, interest in philanthropy and fundraising classes has grown as more business schools emphasize ethics and corporate responsibility in the curriculum.

I am still trying to work out what exactly is the connection between CSR and philanthropy (Chapter 3: How Much Does CSR Matter? p56). The more I think about it, however, the smaller it seems to be. Although there are specific tax advantages to a for-profit firm in donating money (as well as marketing-related benefits if employed strategically), unless there is a direct connection to business operations, the argument for firms donating large sums in areas in which they have low levels of expertise is difficult to make.

Have a good weekend
David


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


Philanthropy Gains Eager Followers in B-Schools
Bloomberg Businessweek
By Alison Damast
Aug 18, 2011
http://newsletters.businessweek.com/c.asp?979842&c55a2ee820194f0f&2
MBA and undergraduate courses on philanthropy are proliferating as interest grows among a generation of B-school idealists

Wednesday, October 19, 2011

Strategic CSR - Social Entrepreneurship

The article in the url below highlights flaws in what it terms “the trendy field of social entrepreneurship”—the framing of developing world problems based on a Western perspective and then proposing out of context solutions without fully understanding the real-life complexities.

The article, in particular, focuses on a competition, initially proposed on Harvard Business Review’s website, to design a $300 home to alleviate housing needs in poorer parts of the world, such as in India’s slums:

But one expert has been left out of the competition, even though her input would have saved much time and effort for those involved in conceiving the house: the person who is supposed to live in it.

The article then goes on to outline why “the $300 house will fail,” explaining that many residents already have equity of up to $3,000 in their current properties and are unlikely to surrender that value, while importing ready-made constructions will disrupt the local employment of laborers, carpenters, plumbers, and so on. In short:

The $300 house will fail as a social initiative because the dynamic needs, interests and aspirations of the millions of people who live in places like Dharavi have been overlooked. This kind of mistake is all too common in the trendy field of social entrepreneurship. While businessmen and professors applaud the $300 house, the urban poor are silent, busy building a future for themselves.

Monday, October 17, 2011

Strategic CSR - Greenpeace

Thomas Friedman of The New York Times has been writing for a long time about the need to act in order to avoid an environmental catastrophe. Given the absence of change in public policy that his well-argued articles have generated, it is amazing that he finds the energy to keep repeating the same points. He is correct; but not enough people with the power to change things are listening. Nevertheless, continue writing he does, although with growing exasperation and increasingly dramatic rhetoric:

You really do have to wonder whether a few years from now we’ll look back at the first decade of the 21st century … and ask ourselves: What were we thinking? How did we not panic when the evidence was so obvious that we’d crossed some growth/climate/natural resource/population redlines all at once?

In the article in the url below, Friedman interviews Paul Gilding who used to be a Director of Greenpeace, but now works independently advocating for change in environmental policy around the world. He has recently published a new book, ‘The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World’ (http://paulgilding.com/the-great-disruption).

The article is good (as always), but there were a couple of quotes that caught my eye and, I think, place the scale and urgency of the problem in some perspective:

‘If you cut down more trees than you grow, you run out of trees,’ writes Gilding. ‘If you put additional nitrogen into a water system, you change the type and quantity of life that water can support. If you thicken the Earth’s CO2 blanket, the Earth gets warmer. If you do all these and many more things at once, you change the way the whole system of planet Earth behaves, with social, economic, and life support impacts. This is not speculation; this is high school science.’

Friday, October 14, 2011

Strategic CSR - Executive Compensation

The article in the url below presents an enlightening perspective on reforms designed to allow shareholders to vote on executive compensation:

Congress gave shareholders a new "say on pay" over executive compensation. And the returns are in: At 98.5% of companies, the answer was yes. Of 2532 companies reporting, shareholders at 39 of them rejected executive pay plans, according to Mark Borges, a principal at executive pay consultancy Compensia Inc. The tally, which includes Hewlett-Packard Co. and Stanley Black & Decker Inc., was roughly in line with expectations.

The article makes an interesting comment on the value of shareholder/stakeholder involvement in active corporate governance. Either existing shareholders do not think there is a problem or sufficient numbers of shareholders that do think there is a problem are not engaging.

Either way, the result is not particularly encouraging (even though the votes are non-binding!!).

Wednesday, October 12, 2011

Strategic CSR - Death

In the aftermath of Steve Jobs’ death, I was prompted to watch his 2005 commencement address to the graduating class at Stanford (http://www.youtube.com/watch?v=UF8uR6Z6KLc). The speech is good (not great), but is remarkable for his views on death, which are summarized in the article in the url below:

Jobs reflected at length on the undesirability of death from the individual point of view, and the usefulness of it from nature's point of view. He offered no comfort. … Jobs made it clear that he did not welcome death, but also that life could be more interesting knowing that death would be coming.

In short, Jobs made the argument that the best way to ensure you live life to the full is to appreciate that your time is short and should not be wasted. As Jobs said to Stanford’s 2005 graduating class:

"No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because death is very likely the single best invention of life. It's life's change agent; it clears out the old to make way for the new. Right now, the new is you. But someday, not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it's quite true. Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma, which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice, heart and intuition. They somehow already know what you truly want to become."

The comments reminded me of Joseph Schumpeter’s work on creative destruction—we benefit when the weakest firms are replaced by new, innovative firms. In a similar way, Jobs was arguing that it is new life that innovates more readily than those who are older and, perhaps, more set in their ways. Jobs makes no mention of the value of wisdom and experience over youth and energy, but his point was clear and powerful, not least because he was willing to articulate it.

I introduce these ideas to the Newsletter because I think they are relevant to the CSR debate. Death is clearly a personal event and matters to each of us individually and to those who are closest to us. Unless you are someone like Steve Jobs, however, your death is unlikely to matter more broadly. The predominant view of death from a personal perspective reflects the emphasis we place on the individual at the expense of the societal—a shift that occurred around the middle of the twentieth century. Today, we care more about ourselves and less about society, more about our rights and less about our responsibilities, more about our wellbeing and less about the impact the pursuit of that wellbeing may have on others. It is not clear we are individually better off as a result of this shift, but society suffers and ideas, such as CSR, face greater resistance.

Monday, October 10, 2011

Strategic CSR - Puma

The article in the url below by Mallen Baker (Foreword, pxvii) highlights the futility of relying solely on quantitative metrics to capture a firm’s CSR performance. The comment was initially prompted by a BBC News story (http://www.bbc.co.uk/news/business-13410397), which reported that Puma was the “first major corporation to publish its environmental impact costs”:

The combined cost of the carbon PUMA emitted and water it used in 2010 was 94.4m euros.

Baker quickly deconstructs the figure by questioning the assumptions that were necessary to generate such a number that is supposed to represent the environmental damage done by Puma’s operations:

Let's suppose changes in average world temperature lead to the extinction of, let's say Blue Whales, and an obscure currently undiscovered insect in the Amazon. What valuation would we place on the Blue Whale, and how would we calculate it? On the potential economic value of products that might be extracted from it? On the basis of what someone would be prepared to pay for it's existence to be preserved? And what about the insect we never even heard of? Suppose it might hold the secret of a new pharmaceutical discovery? Or then again, it might not.

His conclusion, which it is difficult to disagree with, is:

So the figures are bogus. Unquantifiable. Why would the BBC cover such a story? Oh, yes, that's right. Because the figures have been produced by PwC amongst others. The magical power of auditors to give credibility to numbers.

Additional comment by Toby Webb (of Ethical Corporation Magazine) welcoming Puma’s report can be found at: http://ethicalcorp.blogspot.com/2011/05/well-done-puma-some-serious-research-on.html

In spite of the futility involved in this exercise to measure perfectly a firm’s CSR/sustainability profile, does that mean we have to throw our hands up in the air and surrender, returning to moral/ethical arguments designed to persuade executives to ‘do the right thing’?

Baker’s point that, as a society, we place great faith in the face-value of numbers (and are less likely to question the underlying methodology) provides the ammunition he needs to deconstruct the figure Puma arrives at; it also, however, provides the logic for continuing the pursuit of effective metrics for measuring CSR activity.

To the extent that we can arrive at a standardized way of measuring what we agree should be measured, then we will be able to compare one firm’s activity with another’s. Whether those figures are 100 percent accurate is less important than whether any biases are applied equally to all firms. So many of our measurements involve subjective interpretations and assumptions, but have become accepted as objective statements of fact (albeit socially constructed). Placing a value on the extinction of the Blue Whale versus the potential damage of an unrealized pharmaceutical discovery will always involve some element of subjectivity (and, therefore, be open to contestation).

There is a great deal of value, however, in identifying a relative measure of which firms are better or worse performers. This speaks to continued investigation in this difficult area and the application of standardized measures across all firms. As Baker concludes:

the point is not the answer – it is that you haven't sufficiently well-defined the question.

The work that Walmart (and other retailers) is doing to create standardized “eco-labels” across all its products is important and carries the potential to change the game in this area (see: http://www.ecoindexbeta.org/ and http://earth911.com/news/2011/03/01/nike-walmart-target-other-brands-launch-eco-clothing-index/).

Friday, October 7, 2011

Strategic CSR - Zappos

Over the summer, I saw the CEO of Zappos, Tony Hsieh, interview on The Colbert Report (http://www.colbertnation.com/the-colbert-report-videos/393612/august-01-2011/tony-hsieh).

He talked about Zappos’ core values, so I looked them up (http://about.zappos.com/our-unique-culture/zappos-core-values):

  1. Deliver WOW Through Service
  2. Embrace and Drive Change
  3. Create Fun and A Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships With Communication
  7. Build a Positive Team and Family Spirit
  8. Do More With Less
  9. Be Passionate and Determined
  10. Be Humble

I have long been interested in Zappos (see CSR Newsletter: October 6, 2008, http://strategiccsr-sage.blogspot.com/search/label/Zappos). Partly this is because my wife has told me about the firm’s phenomenal customer service, but also because Zappos offers its new employees $2,000  to leave the firm after they have finished their orientation training (http://www.businessweek.com/smallbiz/content/sep2008/sb20080916_288698.htm, previously, the figure was $1,000). The idea is that those who take the money are not that committed to the firm and would not make good colleagues, whereas those who stay are likely to be more committed.

The impression created is a very positive one (i.e., the values seem genuine). Zappos is a great place to buy from and appears to be a good place to work. Hopefully, they will continue to be successful.

Wednesday, October 5, 2011

Strategic CSR - Localism

The concept of “localism” refers to the process by which decision-making power over local government issues is devolved to the citizens who live in the area and are most affected by the outcomes. The article in the url below reports on a “localism bill’ that was introduced in the UK Parliament at the end of 2010 and represents “the biggest upheaval in the English and Welsh planning system in more than 60 years”:

In essence it will mean communities are able to plan where they most want to see new homes and businesses. There will also be a right to bid to run public services. So instead of losing amenities that play a vital role in the community, such as meeting rooms, swimming pools, village shops, markets or pubs, the bill will give community groups a right to express an interest in running those local services.

In particular:

The government has set up a pilot scheme in which 17 communities across the UK – Neighbourhood Planning Front Runners – will receive £20,000 each to test radical new rights to decide what gets built, where and what it should look like.

In terms of converting ideas into policies:

If the communities’ proposals meet certain basic criteria, do not cut across the local authority’s own policies and are cleared by a local authority inspector, a referendum (paid for and administered by the local authority) must then be held. If the majority votes in favour then the local authority must make the plan.

The bill is on schedule to be passed into law by the end of 2011 (http://services.parliament.uk/bills/2010-11/localism.html) and “should come into effect on April 6 2012.