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, January 31, 2014

Strategic CSR - Walmart

The article in the url below reports the number of job applications received by Walmart when it advertised 600 vacancies recently for a new store that it is planning to open in Washington D.C.:
 
“The store is currently combing through more than 23,000 applications for 600 available positions. … That means that Wal-Mart will be able to hire one person for every 38 applications it receives — i.e., just 2.6% of applicants will walk out with a job.”
 
Walmart is often criticized for paying below market wage rates. In reality, however, the firm routinely receives applications that are many multiples of however many job openings it has. This case may be extreme (no doubt exaggerated by the economic situation), but the phenomenon is common. The article illustrates its point by making a clever comparison:
 
“That's more difficult than getting into Harvard. The Ivy League university accepts 6.1% of applicants.”

The question this story generates is: Is Walmart paying above or below market rates for the jobs it is advertising?
 
Have a good weekend.
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

 
Applicants For Jobs At The New DC Walmart Face Worse Odds Than People Trying To Get Into Harvard
By Ashley Lutz
November 19, 2013
Business Insider
 

Wednesday, January 29, 2014

Strategic CSR - GM Foods

Internally, I have long debated the value of genetically modified (GM) crops. The PR surrounding them is compelling (increase crop yields as a way to minimize hunger and malnutrition around the world), yet they still seem somewhat creepy (modifying plants to taste differently and repel insects). Speeding up the process of evolution seems dangerous in ways that we may not be aware of before it is too late. In contrast, the editorial by The Economist in the url below takes a definitive stand in favor of further exploration and study. In the process, it also does a good job of pointing out the dangers of unrepresentative NGOs.
 
First, the editorial makes the statement that, following the recent retraction of an academic paper from 2012 that suggested GM foods might cause cancer (the paper’s methods were found to be flawed):
 
“There is now no serious scientific evidence that GM crops do any harm to the health of human beings. There is plenty of evidence, though, that they benefit the health of the planet.”
 
This is important because of the challenge posed by the global population expansion:
 
“One of the biggest challenges facing mankind is to feed the 9 billion-10 billion people who will be alive and (hopefully) richer in 2050. This will require doubling food production on roughly the same area of land, using less water and fewer chemicals. It will also mean making food crops more resistant to the droughts and floods that seem likely if climate change is a bad as scientists fear.”
 
Importantly, we have no good alternatives. In other words, it is either utilize GM technology or condemn many millions of people to a miserable life and an early death:
 
“Organic farming—the kind beloved of greens—cannot meet this challenge. It uses far too much land. If the Green revolution had never happened, and yields had stayed at 1960 levels, the world could not produce its current food output even if it ploughed up every last acre of cultivable land.”
 
GM foods, on the other hand, offer a real potential solution to this challenge, while also containing environmental benefits:
 
“GM crops boost yields, protecting wild habitat from the plough. They are more resistant to the vagaries of climate change, and to diseases and pests, reducing the need for agrochemicals.”
 
NGO groups opposed to GM foods, however, apparently cannot sacrifice the principle of opposition for the practicality of expanding access to food and nutrition:
 
“In August environmentalists in the Philippines vandalised a field of Golden Rice, an experimental grain whose genes had been modified to carry beta-carotene, a chemical precursor of vitamin A. Golden Rice is not produced by a corporate behemoth but by the public sector. Its seeds will be handed out free to farmers. The aim is to improve the health of children in poor countries by reducing vitamin A deficiency, which contributes to hundreds of thousands of premature deaths and cases of blindness each year.”
 
The editorial states that this is no longer an argument of ideological purity, but a significant moral and ethical transgression:
 
“Vandalising GM field trials is a bit like the campaign of some religious leaders to prevent smallpox inoculations: it causes misery, even death, in the name of obscurantism and unscientific belief. … On moral, economic and environmental grounds, this must stop.”
 
The editorial is particularly insightful in noting the inconsistent use of scientific research:
 
“In the field of climate change, environmentalists insist that the scientific consensus should frame policy. They should follow that principle with GM crops, and abandon a campaign that impoverishes people and the rest of the planet.”
 
NGOs have a higher duty of transparency and accountability. These organizations often have a narrow funding base and face little oversight (other than via laws and regulations). As such, they have a duty to ensure their actions maximize value, broadly defined, rather than pushing the political agendas of a minority. In terms of GM foods, it is hard not to agree with The Economist that they need to reassess their priorities. After all, as the article in the second url below notes:
 
“About 93% of the soybeans and 85% of the corn grown in the US are genetically modified, according to the USDA.”
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Fields of beaten gold
December 7, 2013
The Economist
17
By Marc Gunther
December 4, 2013
The Guardian
 

Sunday, January 26, 2014

Strategic CSR - Carbon price

While carbon markets at the governmental level are floundering (think Europe's low cost of carbon and Australia reversing course on legislation to introduce a cap-and-trade scheme), the article from The Economist in the url below shows that most of the innovation on this issue is coming from the private sector. Firms are increasingly developing a cost for carbon that they are then using to plan future projects and investments:
 
"A study by CDP, a research group, asked large firms based or operating in America what tools they had for managing risk; 29 said they used an internal carbon price. Anecdotally, more apply such a price but did not mention it as a risk-mitigation measure."
 
Because firms are doing this on a firm-by-firm basis and they range across vastly different industries, the prices they are allowing for a ton of carbon vary widely—primarily because carbon is relevant to their operations in different ways:
 
"The prices range from $6-7 a tonne of carbon dioxide at Microsoft to $60 a tonne at Exxon Mobil. … As a rule, those whose assets have a long productive life and which might be affected by green policies far into the future (such as oil companies) use higher prices than consumer-goods firms whose products are mainly influenced by current policies."
 
The companies are pushing ahead with this for two basic reasons: first, although it is hard to understand why they think so based on recent performance, firms anticipate politicians will eventually get their act together and impose a carbon price:
 
"For many companies the aim is to prepare themselves for future environmental legislation. AEP, a power supplier, says it uses the system because 'it assumes a price of carbon…will begin in the US by roughly 2020.' Delta Air Lines says it uses a price for evaluating flights to Europe 'in anticipation of compliance with EU ETS.'"
 
Second, it allows firms, such as ConocoPhillips and Disney (see: Strategic CSR – Carbon tax), to better understand the present value of future projects and investments:
 
"ConocoPhillips, an oil firm, requires that capital projects worth over $75m calculate the cost of emissions based on a price of between $8 and $46 a tonne, depending on the life of the project. The forecast value of a new oilfield would be: estimated output multiplied by the estimated future oil price minus development costs and carbon emissions. … Disney, a media conglomerate, goes further still. It invests in schemes to offset or reduce carbon emissions and charges the cost of these to business units in proportion to how much they contribute to the company's overall emissions. In effect, this works like an internal carbon tax."
 
The result of these varied approaches is a range of prices among firms. As the article notes, however, the surprising (and encouraging) thing is how high some of the prices are—much higher than any of the failing government experiments:
 
"The market price of carbon is €4.90 ($6.70) per tonne of CO2 in the EU, $11.50 in California. Big oil companies charge $34 or more. That is closer to the 'social cost of carbon'—the damage from an extra tonne of CO2—than to the market price. … the sort of carbon price some companies are using for planning would, if it became a market price, have a much bigger impact than any of the policies that governments are now talking about."
 
The graphic that accompanies the article demonstrates the extent of the differences in internal carbon price among firms:
 
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Carbon copy
Some firms are preparing for a carbon price that would make a big difference
December 14, 2013
The Economist
70
 

Friday, January 24, 2014

Strategic CSR - Financial Crisis

The article in the url below provides an update on the cost of the recent Financial Crisis:
 
“Wall Street could pay nearly $50 billion to buy peace from federal authorities who are taking aim at the banks over their role in the mortgage crisis, according to interviews and a confidential analysis of the industry’s potential legal exposure. … The $50 billion figure does not include JPMorgan’s $13 billion payout, which means the ultimate industry tab could exceed $60 billion, according to the analysis.”
 
The basis for these estimates is the $13 billion settlement announced at the end of last year between the government and JP Morgan. Based on the relative amounts of mortgages issued by each of the largest banks from 2005-2008 (see accompanying graphic) and comparing to the JP Morgan settlement, the article arrives at estimates for each of the banks, individually:
 
“The analysis, which lawyers prepared for one of the financial institutions and which was reviewed by The New York Times, indicates that Bank of America could ultimately settle for $11.7 billion in penalties, with an additional $5 billion in relief to homeowners. Morgan Stanley’s combined tally, the analysis shows, could be around $3 billion, with roughly a third going to consumer relief, while Goldman Sachs’s total could come to roughly $3.4 billion. For the Royal Bank of Scotland, the total price could be around $10 billion, which might prompt an outcry in Britain, where the government owns a majority stake in the bank. Citigroup could pay roughly $1 billion, the analysis shows. The potential penalties for other banks are under $1 billion, the analysis shows.”
 
It is encouraging to see the government act as a concerned stakeholder … at last. Of course, all pain is relative:
 
“A payment of $50 billion, made up of a string of separate deals, would amount to roughly half the total annual profit of large American banks in 2012.”
 
Have a good weekend
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits
By Jessica Silver-Greenberg and Peter Eavis
January 10, 2014
The New York Times
Late Edition – Final
A1
 

Wednesday, January 22, 2014

Strategic CSR - Welcome back!

 
 
Welcome back to the Strategic CSR Newsletter!
The first Newsletter for the Spring semester is below.
As always, your comments and ideas are welcome.
 
 
Over the break, I read the foundational 1953 book by Howard Bowen, Social Responsibilities of the Businessman. Two thoughts struck me—reading the book was both uplifting and depressing, essentially for the same reason.
 
First, the process was uplifting because of how prescient Bowen was in identifying trends and proposing answers to issues that we still debate. Much of what he wrote in 1953 would not have looked out of place in a policy proposal or opinion paper published today. It may be that, if more people had just read Bowen’s book, a lot of the debate in the intervening period could have been circumvented.
 
Second, the process was depressing because we still do not have widely-agreed upon answers to the questions that Bowen (and others, such as Frank Abrams, see: Abrams, F. W. 1951. Management's Responsibilities in a Complex World. Harvard Business Review, 29(3): 29-34) were asking 60 years ago. Here is one example (the book is littered with similar ideas):
 
“The day of plunder, human exploitation, and financial chicanery by private businessmen [sic] has largely passed. And the day when profit maximization was the sole criterion of business success is rapidly fading. We are entering an era when private business will be judged solely in terms of its demonstrable contribution to the general welfare.” (p52)
 
Of course, the constant ‘reinventing of the wheel’ is great because it keeps us all in a job; but it would be nice to at least feel like we are making progress after so much effort.
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/