The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Friday, September 28, 2012

Strategic CSR - Tar sands

If you feel like ruining your day, the article in the url below is a good place to start. This first quote provides a brief indication of the joyous news it contains:

GLOBAL warming isn’t a prediction. It is happening. That is why I was so troubled to read a recent interview with President Obama in Rolling Stone in which he said that Canada would exploit the oil in its vast tar sands reserves ‘regardless of what we do.’ If Canada proceeds, and we do nothing, it will be game over for the climate.

The news gets worse from there:

Canada’s tar sands, deposits of sand saturated with bitumen, contain twice the amount of carbon dioxide emitted by global oil use in our entire history. If we were to fully exploit this new oil source, and continue to burn our conventional oil, gas and coal supplies, concentrations of carbon dioxide in the atmosphere eventually would reach levels higher than in the Pliocene era, more than 2.5 million years ago, when sea level was at least 50 feet higher than it is now. That level of heat-trapping gases would assure that the disintegration of the ice sheets would accelerate out of control. Sea levels would rise and destroy coastal cities. Global temperatures would become intolerable. Twenty to 50 percent of the planet’s species would be driven to extinction. Civilization would be at risk.

Good luck planet!

Have a good weekend.

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Game Over for the Climate
By James Hansen
May 10, 2012
The New York Times

Wednesday, September 26, 2012

Strategic CSR - Scale

Toby Webb of Ethical Corporation Magazine has a great blog (The Smarter Business Blog, and uses it to bring an innovative and progressive perspective to cutting-edge issues regarding CSR and sustainability. In the article in the url below, Webb raises the issue of scale—that is, rather than focusing on good ideas alone, he criticizes the CSR community for ignoring the importance of how to scale-up those good ideas to make sure they have a large enough effect to matter:

In preparation for reading Tim Jackson’s book Prosperity Without Growth, I’ve been watching his “economic reality check” Ted talk from a couple of years ago. What worries me about this talk, especially given the popularity of Ted lectures, is the paucity of practical solutions within it. … Jackson’s Ted talk, as with so many, seems to present various options without discussing how they might reach scale to the point where they can make a difference. And this goes for many causes championed in the name of sustainability and putative alternatives to conventional capitalism.

The trouble is, of course, that many of the ideas offered to revolutionize capitalism may not be scalable. That, like the market for socially-responsible, ethical, and/or sustainable consumer products, their reach is limited because most people are not yet persuaded of their inherent value. As such, while Webb is correct to push for more practical approaches to reforming our economic model, I can’t help feeling that the issue of scale should not be the primary focus of debate:

The key question to address is whether social entrepreneurs, B corporations and community interest companies can be managed in a way that enables them to reach scale. And how should they do so – is it best for each one to become big, or for small organisations to be replicated by the dozen?

Surely, the more important question is: Do we need to invent new organizational forms, ones more effectively grounded in CSR principles, or can we fix the model that already has scale—our current corporate structure and small and medium-size businesses? I have looked a fair bit at B-corporations and I am struck by how little they differ (in organizational structure) from ‘regular’ firms. They promise to act in the interests of a broader range of stakeholders, but that is also a promise that regular firms can (and should) make within the current legal and governance structures. In other words, it is not the organizational form that is preventing firms pledging to be more socially responsible, but the willingness of executives to make such commitments. The B-corp structure is a solution to a problem that I am not sure exists.

In general, however, if the answer to the question of revolution versus reform is “revolution” (i.e., we cannot fix the current model and have to invent something new), I think we are in trouble. The more important focus (and realistic goal) is to reform what we have (that is, by definition, already to scale). Centuries of economic and market-based interactions have generated the dominant economic model for a reason—it works given the huge constraint we face (human nature). As such, my sense is that reform, rather than revolution, is more likely to produce results that will work.

Will those results be enough? Well, …. that is another question.

Take care

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Alternative capitalism: What’s the big idea?
By Toby Webb
June 4, 2012
Ethical Corporation Magazine

Monday, September 24, 2012

Strategic CSR - WL Gore

From the perspective of someone who would aspire to be a boss, if he worked for a for-profit firm, the article in the url below is refreshing, but also slightly threatening:

Like many tech companies, Valve Corp., a videogame maker in Bellevue, Wash., boasts high-end espresso, free massages and laundry service at its offices. One thing it doesn't have: bosses.

Reportedly, in the absence of hierarchical oversight, employees are motivated by the innovative structure, which seems to generate a culture that veers from anarchy to Communism:

At Valve, there are no promotions, only new projects. To help decide pay, employees rank their peers—but not themselves—voting on who they think creates the most value. … Any employee can participate in hiring decisions, which are usually made by teams. Firings, while relatively rare, work the same way: teams decide together if someone isn't working out. As for projects, someone typically emerges as the de facto manager, says Greg Coomer, a 16-year veteran of Valve who works on product design. When no one takes the lead, he adds, it's usually a sign that the project isn't worth doing.

The article reports that the ’boss-less’ approach can also be applied to larger, more traditional organizational structures:

For years General Electric Co. has run some aviation-manufacturing facilities with no foremen or shop-floor bosses. The industrial giant says it uses the system to boost productivity in low-volume factories with a relatively small number of employees, each of whom can do several tasks.

WL Gore (see: Strategic CSR: WL Gore) provides another good example of how this approach can work in practice:

Since it was founded in 1958, W.L. Gore has operated under what it calls a ‘lattice’ management structure, which relies on teams in place of bosses and traditional chains of command. … Gore's 10,000 employees, who work mainly in engineering and manufacturing, take on leadership roles based on their ability to ‘gain the respect of peers and to attract followers,’ says Ms. Kelly, the CEO. Those who choose not to take the lead also are valued, she adds, noting that the company prides itself on staff ‘followership.’ … Gore's employees, who are called ‘associates,’ each have a sponsor to guide their career and orient them to company culture. Jim Grigsby, an electrical engineer who joined Gore 13 years ago after working for more traditional companies, including defense contractors, says his sponsor urged him to spend a few days simply meeting people. … Mr. Grigsby found it jarring at first—‘Am I really getting paid just to meet people?’ he says he wondered. But, in a few months, he says, ‘it becomes apparent that you need these people to get project work done.’

Take care

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Who’s the Boss? There Isn’t One
By Rachel Emma Silverman
June 20, 2012
The Wall Street Journal
Late Edition – Final

Friday, September 21, 2012

Strategic CSR - Organic food

The article in the url below covers the recent controversial meta-analysis by Stanford University researchers who analyzed more than four decades of research on the relative merits (health, nutrition, etc.) of organic over conventional foods. Some summary quotes:

They concluded that fruits and vegetables labeled organic were, on average, no more nutritious than their conventional counterparts, which tend to be far less expensive. Nor were they any less likely to be contaminated by dangerous bacteria like E. coli.

The researchers also found no obvious health advantages to organic meats.

Conventional fruits and vegetables did have more pesticide residue, but the levels were almost always under the allowed safety limits, the scientists said. The Environmental Protection Agency sets the limits at levels that it says do not harm humans.

Judging by the robustness of the organic food market and the strength of the backlash this report generated, these data are unlikely to change any consumption habits any time soon:

The organic produce market in the United States has grown quickly, up 12 percent last year, to $12.4 billion, compared with 2010, according to the Organic Trade Association. Organic meat has a smaller share of the American market, at $538 million last year, the trade group said.

Have a good weekend.

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Stanford Scientists Cast Doubt on Advantages of Organic Meat and Produce
By Kenneth Chang
The New York Times
September 4, 2012

Wednesday, September 19, 2012

Strategic CSR - Public companies

For the CSR project to be successful, iterative, mutually-respectful relations among the firm and its stakeholders are essential—stakeholders must be willing to hold firms to account and firms must be willing to respond to calls for behavior modification. Within this over-arching framework, one stakeholder relationship that is essential to get right is the relationship between firms and regulators. If there is imbalance, with regulations producing uncertain, oppressive, or inconsistent legal environments, firms will be encouraged to withdraw and an important source of oversight will be lost or weakened. The article in the url below suggests that this may be happening in leading developed economies:

The number of public companies has fallen dramatically over the past decade—by 38% in America since 1997 and 48% in Britain. The number of initial public offerings (IPOs) in America has declined from an average of 311 a year in 1980-2000 to 99 a year in 2001-11. Small companies, those with annual sales of less than $50m before their IPOs—have been hardest hit. In 1980-2000 an average of 165 small companies undertook IPOs in America each year. In 2001-09 that number fell to 30.

To the extent that firms and their stakeholders are disengaged, firms lack an important incentive to meet the needs and concerns of those stakeholders—in other words, to act socially responsible. These numbers suggest that the cost of going public for many firms today outweighs the benefits. And, with less oversight comes less transparency:

Public companies built the railroads of the 19th century. They filled the world with cars and televisions and computers. They brought transparency to business life and opportunities to small investors. Because public companies sell shares to the unsophisticated, policymakers are right to regulate them more tightly than other forms of corporate organisation. But not so tightly that entrepreneurs start to dread the prospect of a public listing. The public company has long been the locomotive of capitalism. Governments should not derail it.

As the article in the second url below indicates, society is worse off as a result:

Public companies produce annual reports, hold shareholder meetings and explain themselves to analysts. Private companies by comparison operate behind a veil of secrecy. The danger is that regulators are creating a corporate version of the dual labour market. By shining a spotlight on public companies, they are encouraging businesses to take refuge in the shade of the private sector.

Take care

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The endangered public company: The rise and fall of a great invention and why it matters
May 19, 2012
The Economist

The big engine that couldn’t
May 19, 2012
The Economist

Monday, September 17, 2012

Strategic CSR - Luck and responsibility

One of the best graduation addresses from last year was made by Michael Lewis, who writes extensively (and well) about the financial industry. Lewis gave the graduation address at Princeton in June. A YouTube video of the speech, which is well-worth watching, can be seen at:

Lewis was then interviewed on the PBS Newshour ( to explain in more detail why he focused on the main issue that he did—luck and responsibility:

If you are coming out of an Ivy League school today, you are encouraged to believe that you are very special. You have passed through all these very fine filters that society has created and you’ve got this road ahead of you that is deserved and earned and I guess that I do think that it is very easy for the people sitting in those seats to forget that they’re lucky, that there is a huge amount of chance in life and accident plays a very big role in life and they ought to dwell on that for a minute, they ought to dwell on how fortunate they are. … I do think there has been this idea sucked out of society and culture, an idea that used to be pretty robust and that is the idea of noblesse oblige—the idea that to whom much is given, much is expected from. ... There is baked into [life] an awful lot of luck and when you realize that, how do you respond to that? And I think the way to respond to that is with a kind of update of the sentiment of noblesse oblige, that you were the one who chance paid this visit upon, there were others who didn’t have that kind of luck, you owe them something. Think about that, think about the responsibility of being lucky.

Lewis’ message is notable, I think, for two reasons: First, because he told a group of students (who, by definition, have been successful most of their lives) that there is a lot more to their success than their individual abilities; and, second, that the recognition and acceptance of this knowledge carries a responsibility towards those who have been less lucky.

While, in the PBS interview, he was pushed to be more specific about how these students might repay their luck and avoided a direct answer, I think the specifics are less important. All individuals who feel a responsibility fulfill that responsibility in idiosyncratic ways. “From each according to his ability, to each according to his need,” or something to that effect! J

Take care

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Friday, September 14, 2012

Strategic CSR - Monsanto

I am no defender of Monsanto, but the article in the url below presents some data that are hard to ignore. In particular, the article focuses on crop yields in different countries. In the U.S., where Monsanto has had a large and controversial influence on the agribusiness industry, crop yields are far superior to countries with less-developed agribusiness industries:

Typical corn yields, in bushels per acre:
  • U.S. - 150
  • Argentina - 129
  • Mexico - 126
  • EU - 119
  • Brazil - 98
  • China - 84
  • South Africa - 68
  • E. Europe - 56
  • India - 37

While mass-produced agriculture is far from ideal for the ecosystem, certainly not for everyone, and criticized by many (e.g.,, it is hard to ignore the data. Some of Monsanto’s innovations can add value in developing economies with agricultural sectors routinely decimated by difficult weather patterns, low access to fertilizers, and overall inefficiency:

India gets as many bushels of corn per acre as the U.S. did 70 years ago.

There is insufficient land in the world to satisfy our food demands solely via organic production methods. While national governments play a huge role in policing food production (making sure it is safe and sustainable), it is hard to escape the conclusion that firms like Monsanto need to be included as part of the solution to satisfying the nutritional needs of the world’s growing population.

Have a good weekend.

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More Monsanto Magic Likely to Be Reaped
By Spencer Jakab
April 4, 2012
The Wall Street Journal

Wednesday, September 12, 2012

Strategic CSR - Unintended Consequences

The article in the url below identifies an interesting problem that caused Tennier Industries, a military clothing manufacturer from Tennessee, recently to lose a $45mn U.S. Defense Department contract:

Tennier lost the deal not to a private sector competitor, but to a corporation owned by the federal government, Federal Prison Industries.

Needless to say, Federal Prison Industries (also known as Unicor) does not represent ‘fair competition’ for Tennier:

Federal Prison Industries … does not have to worry much about its overhead. It uses prisoners for labor, paying them 23 cents to $1.15 an hour. Although the company is not allowed to sell to the private sector, the law generally requires federal agencies to buy its products, even if they are not the cheapest.

As a result of losing the contract, Tennier was forced to fire 100 workers and lost a sizable portion of annual revenues. What is interesting to consider, therefore, is the idea that, in spite of the economic hardship imposed on Tennier’s workforce, Unicor provides great social value in terms of prisoner rehabilitation:

According to the Bureau of Prisons, inmates who go through the program are 24 percent less likely to return to jail and 14 percent more likely to find employment upon release because of the skills and experience they receive.

Nevertheless, that doesn’t make losing the contract any more palatable for Tennier and other firms, such as Campbellsville Apparel from Kentucky, that are unfortunate enough to find themselves in competition with Unicor:

‘My employees just cannot believe the fact that a prisoner who should be paying a debt to society is being promoted through the federal government to take a job from an American taxpaying citizen,’ [Chris Reynolds, president of Campbellsville Apparel] said.

Take care

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Competing With Prison Labor
By Diane Cardwell
March 15, 2012
The New York Times
Late Edition – Final

Monday, September 10, 2012

Strategic CSR - Chick-fil-A

The problem with a values-based approach to CSR becomes apparent when a firm proudly announces its support for values with which you disagree. The article in the url below presents a good example of this and, in the process, summarizes an important critique of the CSR movement:

Conservatives sceptical of the corporate social responsibility (CSR) movement have often charged that CSR is a stalking horse for liberal causes that have failed to get traction through ordinary political channels. This charge finds some support, I think, in the fact that few in the media seem to see Chick-fil-A's Christian-influenced culture and business practices as an example of CSR, though obviously it is. Doesn't the demand that corporations act responsibly in the interests of society, in ways other than profit-seeking, directly imply that corporate leaders who find same-sex marriage socially irresponsible should do something or other to discourage it?

If we support a firm pledging to move to zero-waste manufacturing plants because the executives are concerned about climate change (amazingly, still an issue for debate for a large percentage of the U.S. population), then we must also support a firm acting to prevent the widespread acceptance of same-sex marriage. Both are issues with passionate advocates who believe the realization of their position will benefit society:

CSR, when married to norms of ethical consumption, will inevitably incite bouts of culture-war strife. CSR with honest moral content, as opposed to anodyne public-relations campaigns about "values", is a recipe for the politicisation of production and sales.

In Strategic CSR, we focus less on constructing a moral/ethical/values-based approach and more on constructing an economic argument, with a particular focus on operational relevance (applicable to the zero waste example above; less obvious in terms of same-sex marriage). But, even there, the idea that a firm should seek to meet the needs and demands of its key stakeholder groups allows for the advocacy of beliefs that are important to those stakeholders (whatever the nature of those beliefs). Assuming that the action being advocated is not illegal, my values differ from your values and, as long as there are sufficient numbers of people who are willing to demonstrate support for a particular position, then a firm can make an economic argument for advocating on behalf of that position:

People can run their businesses according to whatever principles they prefer. It's just stupid business for owners and managers who want to sell their firm's goods and services to people who don't happen to share their morals or politics, especially in cultures in which consumers are increasingly expected to vote with their wallets.

In other words, the only danger for Chick-fil-A is if they are on the wrong side of an issue that is moving strongly against them. Given the many people who showed up at the firm’s restaurants to support the CEO, Dan Cathy’s, statements, however, it is not clear that this is the case:

Matters of moral truth aside, what's the difference between buying a little social justice with your coffee and buying a little Christian traditionalism with your chicken?

Unless we are willing to allow firms to support all issues that are important to key stakeholder groups equally, we are being hypocritical. Cathy’s recent statements were wholly consistent with positions the firm has adopted in the past and are also clearly important to many of the firm’s customers.

Take care

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Feathers flying
By W.W.
August 7, 2012

Friday, September 7, 2012

Strategic CSR - Nudge

The article in the url below highlights the value of behavioral economics for public policy. This is an important and fascinating component of the CSR debate:

‘FREAKONOMICS’ was the book that made the public believe the dismal science has something interesting to say about how people act in the real world. But “Nudge” was the one that got policy wonks excited.

Nudge economics incorporates the biases and prejudices that inform our decisions into policies that encourage ‘optimal’ social outcomes, while still retaining the ‘illusion’ of choice (see: Voluntary vs. Mandatory and Luxury):

Behavioural economists have found that all sorts of psychological or neurological biases cause people to make choices that seem contrary to their best interests. The idea of nudging is based on research that shows it is possible to steer people towards better decisions by presenting choices in different ways.

When deployed intelligently, the results can be powerful:

In one trial, a letter sent to non-payers of vehicle taxes was changed to use plainer English, along the line of “pay your tax or lose your car”. In some cases the letter was further personalised by including a photo of the car in question. The rewritten letter alone doubled the number of people paying the tax; the rewrite with the photo tripled it. … A study into the teaching of technical drawing in French schools found that if the subject was called “geometry” boys did better, but if it was called “drawing” girls did equally well or better. Teachers are now being trained to use the appropriate term.

Have a good weekend

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Nudge, nudge, think, think
Free exchange
The Economist
March 24, 2012

Wednesday, September 5, 2012

Strategic CSR - The Prius Fallacy

The article in the url below identifies and defines the “Prius Fallacy”:

… a belief that switching to an ostensibly more benign form of consumption turns consumption itself into a boon for the environment.

The Prius Fallacy refers to our ability to convince ourselves that the best way to solve our excessive resource depletion of the Earth is to consume more things—essentially:

… reframing luxury consumption preferences as gifts to humanity. A new car, a solar-powered swimming-pool heater, a 200-mile-an-hour train that makes intercity travel more pleasant and less expensive, better-tasting tomatoes—these are the sacrifices we're prepared to make for the future of the planet.

By substituting one (possibly) greener product for another, we kill two birds with one stone—satisfying both our psychological and material needs. What we fail to realize, however, is that even as we innovate, rather than reducing our environmental impact, the unintended consequence is often the opposite (see The Jevons Paradox):

The main effect of additional engineering improvements [to airplanes and travel routes] will be the same as for all such improvements in the past: to make travel easier, cheaper, more convenient and more attractive—thus encouraging us to do more of it.

By continuing to support and work within the current paradigm, the overall effect is to make the problem worse, even while we convince ourselves that we are making it better:

Global energy use is growing faster than population. It's expected to double by midcentury, and most of the growth will be in fossil fuels.

Take care

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It’s Too Easy Being Green
By David Owen
April 14, 2012
The Wall Street Journal
Late Edition – Final

Monday, September 3, 2012

Strategic CSR - Chief Legal Officer

The article in the url below from The Economist contains an interesting profile of the Chief Legal Officer:

ONCE upon a time, in-house corporate lawyers were dismissed as plodders. Partners at law firms make far more money. Only someone who couldn’t hack it as a legal brain-for-hire would seek the dull security of a salaried job, people assumed. But the power of in-house lawyers has grown hugely in the past ten years. The chief legal officer (CLO) is now one of the mightiest figures in the C-suite.

Given the profile’s emphasis on compliance, particularly regarding ethical issues, the CLO’s responsibilities appear remarkably similar to those of the Chief Ethics and Compliance Officer or CECO (Case-study: Ethics and Compliance Officers, p336)!

A CLO must be independent. But unlike outside lawyers, his financial future depends on just one client: his employer. He must protect the company’s reputation with customers, suppliers, journalists and non-governmental organisations. And he must do more than merely tell managers what they can get away with. As Susan Hackett, a former director of the Association of Corporate Counsel, says: “Most lawyers will look at legal rules and say: ‘Here are the ways you can do it.’ A good [general counsel] says: ‘Of course it’s legal, but it’s stupid.’” Diplomacy is as important as legal analysis in delivering this message.

Put another way, how long before the CLO position is renamed the CECO?

Take care

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A Guardian and a Guide
Chief Legal Officers have more power than ever before
By Schumpeter
The Economist
April 7, 2012