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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Wednesday, February 25, 2015

Strategic CSR - Cheeseburgers

There has been some internet buzz about a recently released documentary, Cowspiracy: The Sustainability Secret (http://cowspiracy.com/). The documentary deals with the environmental impact of the meat industry, which is accused of being the leading cause of environmental destruction, carbon dioxide emissions, deforestation, and species eradication. The producers argue that the 'conspiracy' (from which the documentary gets its name) is constructed by the meat industry, which doesn't want anyone to know about these costs, but is enabled by environmental activists who avoid talking explicitly about the issue in order not to offend the meat industry. This is partly to avoid potential lawsuits from well-financed lawyers, but also partly because of the financial support the meat industry provides directly to the most well-known environmental groups.
 
Anyway, I noticed this documentary after a rebuttal appeared in The Wall Street Journal – the article in the url below:
 
"The documentary film 'Cowspiracy,' released this week in select cities, builds on the growing cultural notion that the single greatest environmental threat to the planet is the hamburger you had for lunch the other day. As director Kip Andersen recently told the Source magazine: 'A lot of us are waking up and realizing we can choose to either support all life on this planet or kill all life on this planet, simply by virtue of what we eat day in and day out. One way to eat takes life, while another spares as many lives (plant, animal and otherwise) as possible.'"
 
A large part of the documentary's argument focuses on the issue of externalities (Chapter 8: Case-study – Lifecycle pricing, p473). Externalities are important because they constitute the costs that are not counted for in the price that is paid for a product:
 
"Environmental nutritionists argue that the social and environmental costs of meat production—obesity, chronic disease, the production of green-house gases such as methane, etc.—are not reflected in prices at the grocery store or restaurant. 'The big-ticket externalities are carbon generation and obesity,' New York Times columnist Mark Bittman recently wrote. He argues that beef prices don't reflect these externalities and that 'industrial food has manipulated cheap prices for excess profit at excess cost to everyone.'"
 
In other words, society is essentially subsidizing the meat industry, sustaining companies that either wouldn't otherwise exist, or would exist only at lower levels of profit than they currently earn. While ignoring this point, the WSJ response focuses on consumer access to affordable meat, rather than on ensuring that the price of meat reflects the costs incurred in producing it:
 
"That the price of meat is too low might come as news to food consumers who, according to data from the Bureau of Labor Statistics, paid 14% higher prices for ground beef this June than they did in June 2013 and 29% more than two years ago. Recent droughts and high corn prices—due in part to Washington's support for ethanol—are largely to blame. It is unclear how high prices must rise to overcome the view that meat is 'too cheap.' Some industry critics have even called for new 'meat taxes' to discourage consumption."
 
In emphasizing the benefits meat offers, the author of the WSJ article misses the crucial point that the market for meat, at present, is heavily distorted:
 
"Let us also not gloss over what is beef's most obvious benefit: Livestock take inedible grasses and untasty grains and convert them into a protein-packed food most humans love to eat. We may be able to reduce our impact on the environment by eating less meat, but we can also do the same by using science to make livestock more productive and environmentally friendly."
 
In short, the author of the WSJ response argues, somewhat unconvincingly, that all the fears raised in the documentary are overblown. The more interesting question, of course (in contrast to the article's headline), is 'What if cheeseburgers do melt the ice caps?' and, if so, 'Do we care enough to do anything about it?'
 
Take care
David
 
David Chandler & Bill Werther
 
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Cheeseburgers Won't Melt the Polar Ice Caps
By Jayson Lusk
August 18, 2014
The Wall Street Journal
Late Edition – Final
A13