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


Tuesday, December 8, 2015

Strategic CSR - Nike

 
This is the last CSR Newsletter of the Fall semester.
Have a great holiday break and I will see you in the New Year!
 
 
 
This song was sent to me by a subscriber to the Newsletter. It is a song by the rappers Macklemore and Ryan Lewis—WINGS:
 
 
Essentially, the song is about our material world and the effects consumerism can have on our values and priorities. In particular, Macklemore focuses on Nike shoes and how wearing them (and collecting them) has elevated them to a symbol – they are no longer just a pair of shoes but something to fight for and, in the worst cases, to die for.
 
Macklemore and Lewis use their art form to tackle some serious social problems. I particularly like their song about marriage equality—SAME LOVE:
 
 
The fact that they feel the need to write these songs, of course, is a reflection of the values embedded in our societies and the economic systems that dominate them.
 
Happy Holidays!
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/
 

Monday, December 7, 2015

Strategic CSR - Diageo

The article in the url below follows-up on Diageo's progress towards a series of eight sustainability goals that the firm set itself back in 2008 (see: http://www.diageo.com/en-row/csr/environment/Pages/default.aspx):
 
"To drive improvement, in 2008 we set ourselves a series of challenging targets to achieve by 2015 in the areas of water, carbon emissions, and waste. In 2009, we added commitments covering our packaging."
 
The company's intention was to achieve each of these targets by 2015. However:
 
"The company's latest annual report, published [in August], reveals that it fell short on seven of its eight main environmental goals. It cut waste water pollution by a mere 3.1% (on a 2007 baseline), for example. Its stated goal was 60%. In other areas, it made progress but not enough. So its carbon emissions and waste water levels were down by 33.3% and 45.3%, respectively, rather than the promised 50%."
 
Given this, should Diageo be criticized for failing to meet goals it voluntarily set itself, or should we welcome the firm's honesty in (presumably) accurately measuring these metrics and reporting its shortfall? Unfortunately, The Guardian kind of misses the point and wades in with widespread criticism:
 
"With results such as Diageo's, it's no wonder consumers and the public are mistrustful of corporate commitments. There have been so many false dawns in the sustainability space, says Marilyn Croser, director of the CORE Coalition, a civil society network pushing to improve corporate accountability. 'The pace of change is slow and the problem is very urgent', she adds. Where the drinks multinational is concerned, environmentalists have understandably called foul, with Friends of the Earth Scotland accusing the company of failing 'miserably'."
 
I am inclined to praise Diageo, rather than criticize. We do not need firms generating meaningless metrics and then proudly reporting their achievements. What we need is firms stretching themselves to the point where they essentially have to reinvent their operations to vastly reduce their impact. The fact that Diageo took this task seriously much sooner than most other firms (the targets were set in 2008), accurately measured their progress, and then honestly reported the results indicates to me that they are probably making greater strides than most other companies:
 
"David Croft, global sustainability director at Diageo, insists that the company's targets are science-based and challenging. 'We could all set targets that are readily achieved but what we've tried to do is look at the science and the wider context, such as where climate change is heading,' he says."
 
Yes, we need better performance; and yes, we need it quickly. But we are only going to get where we need to go if we encourage firms when they are honest enough to admit they have fallen short of their own ambitious goals. Since it is almost impossible for most of us to have any idea how hard the company worked towards the targets, or whether it could have done much better, what would the critics have preferred—that the company lied about its progress? Yes, we should be mistrustful of firms when they lie. But, if we are also going to pan them when they tell the truth, we shouldn't be surprised when they are less forthcoming subsequently.
 
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/
 
 
Sobering results for drinks giant Diageo reveal problems of sustainability targets
By Oliver Balch
September 3, 2015
The Guardian
 

Wednesday, December 2, 2015

Strategic CSR - Shared value

One of the main obstacles to generating change in corporations' understanding of CSR is the media's narrow reporting on the issue. Time and time again, I see plenty of evidence that business reporters in respected media outlets have only a rudimentary understanding of the complexity of a subject like CSR, not to mention some of the more basic tenets of capitalism (such as what profit represents and the legal relationship businesses have with their shareholders). The article in the url below is a good example of the danger of possessing insufficient knowledge:
 
"There is something appealing about the concept of 'shared value.' The strategy, first articulated by Michael E. Porter of Harvard Business School and the management consultant Mark R. Kramer, is based on the belief that companies can increase profits and enhance their businesses even as they address pressing social problems."
 
To suggest that Porter and Kramer "first articulated … the belief that companies can increase profits and enhance their businesses even as they address pressing social problems" demonstrates an ignorance of the debate that is astounding. I have detailed my criticism of Porter and Kramer's article elsewhere (see Strategic CSR – Porter & Kramer). Suffice it to say, I am not a fan. While they may have come up with the term "shared value" (primarily to serve their own consulting purposes), there is nothing in the article that is new to anyone who has spent any time thinking about CSR.
 
What I find particularly annoying about the fawning attitude a journalist like Eduardo Porter has towards Michael Porter, however, is that it impedes the prospect of meaningful change. In the case of the article below, the author concludes that companies that "have no time for 'shared value' … [instead are] making an entirely different case: Addressing social problems will have to take a back seat to the bottom line." He makes this assertion as if "addressing social problems" and "the bottom line" are completely unrelated. The result of this flawed logic, which is directly influenced by Porter and Kramer's work, is to suggest that CSR "has its limits" instead of the more important conclusion the author could have arrived at (that CSR is all-encompassing and central to every business) if he had a more sophisticated understanding of the subject about which he was writing.
 
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/
 
 
Corporate Action on Social Problems Has Its Limits
By Eduardo Porter
September 9, 2015
The New York Times
Late Edition – Final
B1
 

Monday, November 30, 2015

Strategic CSR - Hillary Clinton

It will not be many times this election cycle where The Wall Street Journal praises a policy statement by Hillary Clinton. It happened, however, after Clinton's economic speech at NYU over the summer:
 
"Whatever one may think about her policy proposals, Hillary Clinton has put her finger on a real problem: Too many CEOs are making decisions based on short-term considerations, regardless of their impact on the long-run performance of their firms."
 
In order to steady their readers from the shock, the WSJ quickly seeks support for Clinton's ideas from more 'legitimate' sources:
 
"Don't take my word for it. Laurence Fink is the chairman of BlackRock, the world's largest investment fund, with $4.8 trillion under management. In a much-discussed letter to the Fortune 500 CEOs last year, Mr. Fink expressed his concern that 'in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies,' choosing instead to reduce capital expenditures in favor of higher dividends and increased stock buybacks. Such decisions, Mr. Fink warned, can 'jeopardize a company's ability to generate sustainable long-term returns.'"
 
The practice of buybacks is a particularly good example of distorting market forces (i.e., inflating share prices) for self-interested gains (i.e., stock-option-based compensation):
 
"As recently as 1981, buybacks constituted only 2% of the total net income of the S&P 500. But when economist William Lazonick examined the 248 firms listed continuously in this index between 1984 and 2013, he found an inexorable rise in buybacks' share of net income: 25% in the 1984-1993 decade; 37% in 1994-2003; 47% in 2004-13. Between 2004 and 2013, some of America's best-known corporations returned more than 100% of their income to shareholders through buybacks and dividends."
 
While personal financial gain is one motivation that at least conforms to expected behavior, knowingly damaging the company in order to cover-up poor performance seems to be a whole new level of corruption:
 
"When given the chance to speak confidentially, moreover, company executives contradict the capital-redeployment story. … a 2005 survey of CEOs and CFOs in the Journal of Accounting and Economics found that to avoid missing their own quarterly earnings estimates, 80% were willing to forego research-and-development spending, and 55% were willing to delay promising long-term projects that met their firms' internal return-on-investment requirements. A recent McKinsey survey yielded similar results."
 
Even worse, such self-serving behavior appears to be combined with law breaking (e.g., insider trading):
 
"As stock options and awards have surged as a share of total executive compensation, studies have found links between the timing of repurchases and the vesting dates of stock-based compensation. One study even found that executives often appear to time the release of good news to maximize the value of their own noncash compensation."
 
So, well done to the WSJ for acknowledging Clinton's efforts to bring attention to these damaging practices. Where the article diverts from the arguments underpinning strategic CSR, it is in terms of the reasons for correcting this behavior. While the article asserts the need to reinstate "a formula for maximizing shareholder value," I would prefer firms to focus on creating value for their stakeholders, broadly defined.
 
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/
 
 
Hillary Gets It Right on Short-Termism
By William A. Galston
July 29, 2015
The Wall Street Journal
Late Edition – Final
A11
 

Tuesday, November 24, 2015

Strategic CSR - Pay What You Want

The article in the url below represents an exercise in economics, psychology, and humanity:
 
"Zod Arifai, a local chef [in New Jersey], is offering customers a menu with no prices for the month of August, encouraging them to order as many dishes as they'd like at his two side-by-side restaurants. When diners signal for the check, servers ask, 'How much would you like to pay?'"
 
The exercise (which was prompted when the chef decided to close his restaurants and wanted to thank the local community for their support) raises the complex set of emotions and rationale that govern the purchase decisions that we make:
 
"With no price guidelines -- such as a museum's 'suggested donation' -- the offer compels diners to gaze inward and develop ad hoc criteria, in order to look a fresh-faced server in the eye and announce the meal's value. … Consumers like to see themselves as 'fair' and even generous, but also want others to see them as 'prudent and not a sucker.'"
 
The restaurant is reporting mixed results from the exercise. While there are some customers wanting to pay the full value of the meal (as much out of concern for the servers as the chefs), there are others who try to take advantage of the opportunity:
 
"… at least once a night, the staff gets a bad taste — such as from the 'young, smug' table of five that ordered 25 dishes, paid $15 and left a $5 tip."
 
Not all those seeking to take advantage of the opportunity are being mean-spirited, however:
 
"… another family left a thank-you note with their modest amount. 'The food and service was worth way more than we were able to leave.' It continued, 'As a kid in college and a mother doing inconsistent freelance, without the deal we wouldn't have gotten the chance to come.' … And then there was the customer who somehow manned both ends of the bell curve : He took advantage of Mr. Arifai's generosity, even as he expressed concern about the server's pending unemployment. The solution? He left $5 for the food and a $50 tip."
 
As a result, the restaurants' owner feels as though the exercise in trust has been worthwhile:
 
"Profit aside -- and it certainly will be -- Mr. Arifai considers the endeavor a success. 'I've learned that humanity is not as bad as we think,' he said. Yes, 20 percent are paying less than a dollar a dish. 'But 80 percent are not.'"
 
Happy Thanksgiving everyone!
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/
 
 
Pay What you Want? Joy, and Guilt, for Diners
By Jan Hoffman
August 18, 2015
The New York Times
Late Edition – Final
A1
 

Monday, November 23, 2015

Strategic CSR - McDonald's

 
 
In the run-up to Thanksgiving here in the U.S. this week,
today's and Wednesday's Newsletters will relate to the food industry.
 
 
The article in the url below contains some interesting research into the effects on prices of an increase in minimum wages in the fast-food industry:
 
"Raising wages for fast-food workers to $15 an hour would lead to a noticeable but not substantial increase in food prices."
 
Specifically:
 
"According to the Bureau of Labor Statistics, 1.54 million people working in food preparation and serving related occupations make at or below the federal minimum wage of $7.25 per hour. Raising their hourly wages to $15 -- a 107% increase -- would cause prices to rise an estimated 4.3%. That means your $3.99 Big Mac would wind up costing $4.16, and an average fast-food meal costing $7.00 would go up in price to $7.31."
 
Of course, these impacts should not be taken in isolation. Higher wages would also likely reduce turnover, which would reduce other costs, such as those associated with training and increase the efficiencies that result from the accumulation of experience and organizational knowledge:
 
"[The] study suggests that the cost to hire an hourly line position is $1,500 -- a cost that covers recruitment, selection, training and vacancy costs, which may entail overtime pay."
 
Essentially, as argued in strategic CSR, we get the companies that we deserve. If consumers are willing to pay the higher prices to ensure employees are well compensated, this research confirms that it is something that companies can do. If, however, a company raises its prices 4% to pay for wage increases and customers immediately switch to a competing brand/product, then it is silly for the firm to raise wages, since it will ultimately result in many more employees losing their jobs. As a society, what do we care more about – well-paid jobs or cheap hamburgers? Capitalism will accommodate whichever path we choose.
 
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/
 
 
Raising fast-food hourly wages to $15 would raise prices by 4%, study finds
By Sally French
July 28, 2015
MarketWatch
 

Friday, November 20, 2015

Strategic CSR - The courts

The article in the url below contains an interesting example of how the dynamics of climate change might evolve in future years:
 
"A court in the Netherlands has ordered the Dutch government to toughen its climate policies, a major ruling that could motivate environmental activists to pursue a similar legal strategy in other countries."
 
If politicians (who have to face regular elections) are reluctant to discount the short-term costs of meaningful change in favor of the long-term benefits, maybe a country's judges (who have lifetime tenure) can take the necessary courageous steps:
 
"The Hague District Court ordered the government to reduce greenhouse gas emissions by at least 25 percent from 1990 levels in the next five years. The government had previously committed to reducing emissions by 17 percent, but an environmental group, Urgenda, sued and demanded that the reductions be between 25 percent and 40 percent."
 
The primary motivation behind the court's decision was the government's duty towards its citizens:
 
"The decision, translated into English by the government, concluded that 'the possibility of damages for those whose interests Urgenda represents, including current and future generations of Dutch nationals, is so great and concrete that given its duty of care, the state must make an adequate contribution, greater than its current contribution, to prevent hazardous climate change.' … The state, the court said, has a 'duty of care' that applies to the 'livability of the country and the protection and improvement of the living environment.'"
 
I wonder what the U.S. Supreme Court's perspective is on the constitutional duty of the federal government to protect the interests (lives) of its future citizens.
 
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/


Ruling Says Netherlands Must Reduce Emissions
By John Schwartz
June 25, 2015
The New York Times
Late Edition – Final
A10
 

Wednesday, November 18, 2015

Strategic CSR - Oil firms

The article in the url below reports on an announcement earlier this year that, it says, is a surprise:
 
"SIX big European oil and gas firms called on June 1st for a globally co-ordinated price on carbon-dioxide emissions, to restrain the impact on the climate of burning fossil fuels."
 
Moreover, apparently this is somewhat of an emerging trend:
 
"Five years ago no one would have expected the move: as producers of much of the world's dirty fuels, their industry was disinclined to join forces and advocate accelerating the switch to cleaner ones. … And it is not just the energy firms. As world leaders prepare to meet in Paris in December to produce an agreement on reducing greenhouse-gas emissions, attitudes towards climate change have altered profoundly among businesses of all kinds."
 
Since the failed attempts to reach a climate deal in Copenhagen, in 2009, the article reports that three things have changed:
 
"First, the price of renewable sources of energy—especially solar—has dropped dramatically, and their share in power generation is growing. Second, consumers care more about climate change than before. And third, investors—especially long-term ones such as pension funds—have woken up to the risks of owning firms with assets and business models likely to decrease in value as the world 'decarbonises'."
 
Most importantly though, I think, is this comment, which is illustrated in the article by several examples across Europe:
 
"'Our motives are not exactly altruistic,' admits another European boss. 'Our clients and stakeholders demand such initiatives.'"
 
In the process, the article makes the case for strategic CSR:
 
"Firms say that besides savings from greater energy efficiency they gain less quantifiable benefits from an enhanced reputation, a motivated workforce and the like."
 
And, such an enlightened approach to management reflects firms that are simply better run than those that misinterpret the direction in which society is evolving:
 
"Those with published targets for cutting their CO2 emissions are more profitable, delivering a return on invested capital of 9.9%, compared with 9.2% for those with no targets, according to research published by CDP in May. The Low-Carbon 100 Europe index compiled by Euronext, a stock exchange, which includes the European firms with the lowest CO2 emissions in their respective industries, has risen by 60% since the end of 2010. This compares with a 45% rise in the broader STOXX Europe 600 index, from which its components were selected."
 
Since initially reading this article, however, I read the article in the second url below (also in The Economist), which paints a more cynical reason for the public shift in the oil firms' position:
 
"Plenty of oil firms (Exxon among them) are also calling for governments to enact a 'carbon tax' on emitters of greenhouse gases. Their critics argue that this is less altruistic than it appears. For one thing, such a tax would hurt the coal industry especially, thereby boosting the oil firms' gas businesses. And governments, especially in the developing world, where fossil-fuel demand is still surging, may find such a tax politically impossible anyway; the oilmen are calling for it, opponents say, in the knowledge that such countries will never introduce it."
 
But, as the article continues, there is danger for the oil companies in trying to play that game (see Strategic CSR – Exxon):
 
"In the absence of a global carbon tax or some other effective measure, however, the risk for the oilmen is that everyone from environmentalists to politicians will simply find other ways to make them pay for global warming. On November 4th New York's attorney-general, Eric Schneiderman, subpoenaed documents from Exxon to investigate how much it has known since the 1970s about the effects of fossil fuels on the climate. … the firm's run-in with the New York justice department may be a portent of what is to come."
 
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/
 
 
Walking the walk
June 6, 2015
The Economist
Late Edition – Final
57
November 14, 2015
The Economist
Late Edition – Final
61
 

Monday, November 16, 2015

Strategic CSR - Divestment

 
 
In light of the upcoming COP 21 Summit in Paris (beginning November 30),
this week's Newsletters will focus on issues related to climate change.
 
 
The blogpost in the url below from Mallen Baker (Foreword, pxxiv) is one of the best pieces I have seen about the fossil fuel divestment campaign. As usual, Mallen cuts through the emotion driving the issue to focus on why it is short-sighted and completely misses the point:
 
"It is dumb to demonise oil companies for providing the fossil fuels that society currently needs to function, and then blaming them for the fact those fuels get burnt as though all the pollution it causes is their fault, not the fault of those of us who use the energy for heating, lighting, technology and transport. Moving society away from fossil fuel energy is a priority, but punishing companies that provide such fuel in the mean time – as though what they do is morally reprehensible – is blatant hypocrisy. If the fossil fuel industry shut up shop tomorrow, we would be in big trouble, and the poorest in society would be in the biggest trouble first."
 
I would add to this that the degree to which fossil fuels currently drive the whole economy means that, by definition, it is impossible to divest from their effects via investments in the stock market. Focusing on the oil companies themselves misses the point that all firms rely on fossil fuels. As such, if you are truly going to divest from oil investments, you need to get out of the stock market completely (and never buy anything from any company ever again):
 
"The simple fact is that climate change is a problem common to us all. The solution will either be a common solution, or it won't be a solution. Campaigns that rely on us ignoring the fact that top executives also have families and children and a stake of the future, and assumes that they want knowingly to destroy the planet so they can drive a Porche today are campaigns that have more to do with the prejudices and short-sightedness of the campaigners than they do a realistic and actionable plan to achieve sustainability."
 
Yes, we need to move away from fossil fuels, but we need the oil companies on our side to achieve that. The best proposal I have seen about how to do this involves, in some way, paying the energy companies to keep their resources in the ground (see Strategic CSR – Divestment).
 
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/
 
 
Why demonising fossil fuel companies is wrong
By Mallen Baker
July 2, 2015
mallenbaker.net
 

Friday, November 13, 2015

Strategic CSR - Recycling

The article in the url below provides an update on the downturn in the recycling industry:
 
"Once a profitable business for cities and private employers alike, recycling in recent years has become a money-sucking enterprise. [States] are contributing millions annually to prop up one of the nation's busiest facilities here in Elkridge, Md. — but it is still losing money. In fact, almost every facility like it in the country is running in the red. And Waste Management and other recyclers say that more than 2,000 municipalities are paying to dispose of their recyclables instead of the other way around. … 'If people feel that recycling is important — and I think they do, increasingly — then we are talking about a nationwide crisis,' said David Steiner, chief executive of Waste Management, the nation's largest recycler that owns the Elkridge plant and 50 others."
 
Due to a combination of falling commodity prices plus a less efficient recycling system (due to the advent of single-source recycling bins that often contain as much trash as they do recyclable materials), the economics of recycling are spiraling downwards:
 
"'Residue jumped a ton,' said Hallie Clemm, deputy administrator for the city's solid waste management division. In fact, so much nonrecyclable material was being stuffed into the bins that after an audit by Waste Management last fall, the share of the city's profit for selling recyclables plummeted by more than 50 percent. That has driven up the city's processing price for recyclables to almost $63 a ton — 24 percent higher than if it trucked all of its recycling material, along with its trash, to a Virginia incinerator. The D.C. Council recently approved a payment of $1.2 million to Waste Management for the contract year that ended in May. In 2011, the city made a profit of $389,000."
 
As a result, the amount of our total waste that we are recycling is decreasing:
 
"[In June] the Environmental Protection Agency announced a nationwide tally for recycling in 2013 that showed overall recycling had contracted for a second straight year, to 34.3 percent of the waste stream."
 
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/
 
 
American recycling is stalling, and the big blue bin is one reason why
By Aaron C. Davis
June 20, 2015
The Washington Post
 

Wednesday, November 11, 2015

Strategic CSR - Water

The article in the url below contains an interesting statistic:
 
“Globally, we now drink as much packaged water as we do milk.”
 
This is followed by another fact that I still find hard to get my head around:
 
“At 30 litres per person per year, bottled water is the second most popular liquid refreshment after carbonated drinks – a market that it is set to supplant carbonates this year if predictions prove correct.”
 
So, we are drinking more water and, sometime this year, we will start drinking more water than carbonated drinks. That sounds like it should be a good thing, apart from two things: First, it is a bit depressing that carbonated drinks (read sugar) are currently the “most popular liquid refreshment” in the world, and second, there is still the problem that the kind of water we are drinking is not the right kind (i.e., increasingly it comes out of a plastic bottle rather than a tap). While the expansion of bottled water is understandable in many cases:
 
“Bottled water’s global boom is arguably driven by fear, firstly among developing world consumers who worry about water quality from the tap, and secondly among developed world consumers about the health impacts of sugary drinks.”
 
This does not remove the negative environmental impact this industry has:
 
“Yet the prospect of global sales hitting 233bn litres this year brings another set of fears. ‘The problems of waste, inequity, high economic costs and impacts on local water resources are intrinsic to the entire industry,’ says Peter Gleick, president of the US-based Pacific Institute and author of Bottled and Sold: The Story Behind our Obsession with Bottled Water.”
 
The main point of the article, however, is to draw attention to the stupidity of shipping water overseas, when almost all developed countries have sufficient local supplies:
 
“Over one fifth (22%) of water sold in the UK is sourced overseas, according to the Natural Hydration Council, a business membership group. Most comes from northern Europe, although some from as far away as Fiji or the Himalayas.”
 
And then there is the issue of the waste generated by the bottles in which the water is shipped:
 
“Plastic dominates. The industry’s big players, such as NestlĂ©, Danone, Coca-Cola and Pepsi, are all pursuing efforts to increase recycled content in polyethylene terephthalate (PET). But progress is slow. Coca-Cola, for instance, averages 34% of recycled PET across all its bottled drinks. … The figure for Danone’s main water brands is a mere 9%.”
 
As I tell my students, two industries really annoy me – diamonds (that is another story) and bottled water. While a triumph of marketing (heavily driven by deception and, in the case of diamonds, guilt), the result in both cases is a distorted market that does very little to advance human progress.
 
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/


The madness of drinking bottled water shipped halfway round the world
By Oliver Balch
July 9, 2015
The Guardian Sustainable Business
 

Monday, November 9, 2015

Strategic CSR - Exxon

The article in the url below contains interesting information about Exxon's knowledge of climate change:
 
"ExxonMobil, the world's biggest oil company, knew as early as 1981 of climate change – seven years before it became a public issue, according to a newly discovered email from one of the firm's own scientists. Despite this the firm spent millions over the next 27 years to promote climate denial."
 
What does this support by the firm mean in practice?
 
"Over the years, Exxon spent more than $30m on thinktanks and researchers that promoted climate denial, according to Greenpeace."
 
What is Exxon's position today?
 
"Exxon said [in July] that it now acknowledges the risk of climate change and does not fund climate change denial groups."
 
Oh, the wasted time. The steps we would have needed to take back in the 1980s to put the planet on more of a sustainable footing would have been so much less intrusive than the changes we will have to make in the near future if we stand any chance of holding onto the temperate climate that has sustained the planet and allowed humans to evolve. Oh well, as Ray Anderson noted in his TED talk, posing an answer to his own question of why radical change is necessary:
 
"If not for our species, then perhaps for the one that succeeds us – the sustainable species, living on a finite earth, ethically, happily, and ecologically in balance with nature and all her natural systems, for a thousand generations or ten thousand generations; that is to say, into the indefinite future."
 
In terms of the more immediate consequences of Exxon's past public denials, it seems as though the firm's behavior is finally catching-up with it. Last week, New York's Attorney General issued the firm a subpoena to tell more about what it knew and when, and is shaping a case that mirrors the prosecution of the tobacco companies in the 1990s:
 
 
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/
 
 
Exxon knew of climate change in 1981, email says – but it funded deniers for 27 more years
By Suzanne Goldenberg
July 8, 2015
The Guardian
 

Friday, November 6, 2015

Strategic CSR - Perceived risk

There is plenty of research out there to show that humans are very bad at assessing risk. We worry more about shark attacks (which are extremely rare), for example, than we do about car crashes (which are extremely common). One of the main reasons offered for this is the extent to which we feel we have control over the situation (e.g., as a driver of a car instead of a swimmer in the sea). Whatever the reason, it is highly irrational (which is to say it is highly human).
 
Climate change is also something that we have difficulty assessing, partly because the effects are perceived to be global (rather than local) and distant (in spite of all the evidence to the contrary). We are much more sensitive to threats that we feel are direct and immediate, rather than indirect and delayed. That is why concern about climate change dropped during the financial crisis and subsequent recession – essentially, people had more immediate and personal concerns to worry about. According to the article in the url below, however, that is now changing as the economy begins to recover:
 
"About 69 percent of adults say that global warming is either a 'very serious' or 'somewhat serious' problem, according to a new Pew Research Center poll, up from 63 percent in 2010. The level of concern has still not returned to that of a decade ago; in 2006, 79 percent of adults called global warming serious. … Other polls, including by Gallup and The New York Times and Stanford University, have similarly shown that concern about climate change fell sometime after 2008 and has since risen."
 
As the Catholic Church inserts itself more directly into the debate with the publication of the Pope's encyclical on the issue (Laudato Si) in an attempt to influence the negotiations for a global climate accord in Paris next month, it will be interesting to see how the political establishment responds. At least the topic is moving marginally closer to center stage, with more people willing to talk about the science (rather than their beliefs) to make the argument that this is an issue for this generation, not the next:
 
"The percentage of Americans who agree with the scientific consensus — that global warming is occurring and caused by human activity — has also bounced back in the last few years. Sixty-eight percent of Americans also say there is 'solid evidence of warming,' up from 57 percent in 2009."
 
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/
 
 
Americans' Concern Over Climate Change Is Again on the Rise
By David Leonhardt
June 17, 2015
The New York Times
Late Edition – Final
A6
 

Wednesday, November 4, 2015

Strategic CSR - 750!

Today's post is the 750th since I started the CSR Newsletters back in 2007!
 
All 750 posts are archived and freely available on the blog 'Strategic Corporate Social Responsibility' (http://strategiccsr-sage.blogspot.com/).
 
Please encourage your students to use this blog as a resource for class projects and general reading about CSR. The posts are fully searchable. There is also a list of key words (by company and CSR term) down the right-hand-side so they can find specific posts that match their interests.
 
It is hard to believe these Newsletters began so long ago, while the book was still in its first edition. I am currently writing the fourth edition, which will be published by Sage in the late spring/summer of 2016. Thank you to those of you who were kind enough to review the 3e and provide comments on the 4e proposal.
 
As ever, your thoughts and comments are welcome, as well as any questions you have about the book (https://us.sagepub.com/en-us/nam/strategic-corporate-social-responsibility/book237377), online simulation (http://www.strategiccsrsim.com/), or, of course, the Newsletters.
 
Thank you for your support.
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/
 

Monday, November 2, 2015

Strategic CSR - Natural goods

In the blog post in the url below, Mallen Baker (Foreword, pxxiv) questions the value of monetizing environmental resources, such as the oceans:
 
"According to a recent report by WWF, the monetary value of the world's oceans is US$24tn. That's the asset value. If you valued the annual 'goods and services' it provides, you come up with a figure of $2.5tn. No doubt that's meant to sound a lot. No doubt, there may be some people who only pay attention to an issue if it's put into monetary terms. As far as I'm concerned, it's completely irrelevant."
 
I am a big fan of Mallen's work (http://www.mallenbaker.net/csr/), but disagree about this. Quantification helps define the extent of a problem; it also puts it in a context to which most of us can relate (even if the numbers are very large). In contrast, Mallen sees the effort to monetize oceans as a plot orchestrated by, gasp, "the economists":
 
"Putting a cost on the ocean is not that helpful. If you look at how many of the world's processes depend on life in the oceans, how much of the world's protein comes from there, and what might be the knock-on ecosystem consequences of the collapse of the oceans. … [It should not] be defined by the financial value of what the services of valued at during a time of plenty … [but] by the catastrophic consequence of their absence. Sometimes you've got to avoid playing the economists game and keep it real."
 
I am not so sure. Often, the best way to keep something real is to put a price on it. Money seems to have a disproportionately motivating power over humans that other drivers, such as altruism, lack. For whatever evolutionary reason, we are incredibly materialistic beings who are willing to do many things for money that we would not otherwise consider. Such a proclivity produces distorted behavior. Either way, I am not convinced everyone would price oxygen in the way that Mallen suggests:

"Suppose you were going to be denied that oxygen unless you paid for it. What would it be worth to you? Obviously, every penny you owned because without it you die. The financial value of something is, after all, defined by what someone is prepared to pay."

Valuation is a complex process. Some people might not think it is worth living only to be destitute. Moreover, you could apply the same approach to valuing human life in general. In other words, if you ask the question 'What price would you put on your own life?,' Mallen's logic would answer "every penny you owned." Nevertheless, this does not prevent actuaries at insurance companies producing very specific values for life-related premiums that are considerably less than every penny you own. The benefit, of course, is that this process enables certain economic transactions via insurance products that can price the different levels of risk we are all willing to take. I suspect that we will be able to do something similar to help preserve the environment. 
 
In short, I agree with Mallen that, in terms of the oceans, the "consequences of absence are catastrophic," but that does not mean it is a waste of time to try and monetize them. In fact, it suggests to me that we should hurry up and get on with the process. If we are to prevent their complete destruction, our past suggests that a market solution will be most effective and, in order to begin that process, we need to start with how much these natural goods are worth!
 
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/


What price would you put on the oxygen you breathe?
By Mallen Baker
June 8, 2015
mallenbaker.net
 

Friday, October 30, 2015

Strategic CSR - Philanthropy

In a roundabout way, the article in the url below makes the case for strategic CSR:
 
"Over half of companies increased their level of corporate giving from 2012 through 2014, and the data in the new Giving in Numbers report suggest self-interest is well served thereby."
 
Philanthropy is only justifiable, from an operations perspective, if it somehow meets the needs of some of the firm's key stakeholders. Whether that is matching the concerns or values of consumers, motivating employees, or furthering R&D, philanthropy can be justified when it creates value for stakeholders:
 
"Economist Milton Friedman once wrote that 'There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits.' The pattern of corporate giving is consistent with that green-eyeshade approach to social responsibility. More companies are giving to support education, especially STEM. … However, giving for disaster relief is down. An audience poll of 200 senior giving executives at the CECP Summit in May found 51% rethinking their donations for disaster relief, mainly because of the difficulty of making a business case."
 
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/
 
 
Corporate Philanthropy and Shareholder Value
By Gregory J. Millman
June 3, 2015
The Wall Street Journal – The Morning Risk Report
 

Wednesday, October 28, 2015

Strategic CSR - Unilever

The headline and opening sentence in the article in the url below suggests that we have discovered how to measure CSR, comprehensively:
 
"Unilever and Patagonia have cemented their position as the world's most sustainable brands, topping the list of sustainability leaders in a new report released Thursday."
 
In fact, the text should read that these companies are "perceived to be the world's most sustainable brands." The reason comes down to the question asked in the survey that generated the data on which the headline was based:
 
"The 2015 Sustainability Leaders Report, produced by think tank SustainAbility and research consultancy GlobeScan, asked 816 sustainability experts in 82 countries which company they thought best integrated sustainability into its business strategy."
 
When you are asking people "which company they thought best integrated sustainability into its business strategy," you are going to generate opinions rather than facts. This would be OK if the opinions were based on knowledge of what is actually going on inside these companies; instead, they are based on what people think is going on. The dangers of relying on perception-based understandings of reality are that, once a perception is formed, it (a) becomes susceptible to group think (i.e., I need to say what others are saying) and (b) becomes particularly difficult to dislodge (i.e., these companies are the best because they were the best last year). As a result, there is a great deal of inertia in lists like this:
 
"Unilever drew top honors for the fifth year in a row, while Patagonia ranked second, the same position it occupied last year. The two companies were followed, in order, by Interface, Marks and Spencer, Natura, Ikea and Nestle. … BASF is the only new company to make the top 11, while two companies – Walmart and Puma – fell off from last year's top 10 list."
 
The sorts of biases that infuse these kind of survey data become particularly apparent when you look at the regional breakdown of perceptions described in the article:
 
"In Asia, for example, India's Tata group is the fourth-highest regarded company, and Shell and Proctor and Gamble both make the top 10. In Africa and the Middle East, 5% of experts identified SABMiller as a top leader. Meanwhile, in Oceania, Westpac came in third, Tesla came in fourth, and HP, Siemens and Novo Nordisk all made the top 10. Unilever and Patagonia, in fact, were the only two companies to make the leader list in every region."
 
Until we are able to create a meaningful measure of CSR that allows us to capture all aspects of operations and compare across industries and cultures, this (no doubt profitable) industry of creating CSR/sustainability lists is going to be driven by anecdotes and perceptions (which is why companies like Enron and BP won so many CSR/ethics awards for so many years).
 
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/
 
 
Unilever, Patagonia cement their positions as the world's most sustainable brands, says new report
By Bruce Watson
May 28, 2015
The Guardian Sustainable Business