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


Sunday, February 28, 2016

Strategic CSR - Whistleblowers

The article in the url below reveals an interesting trend in who is whistleblowing within companies and what are the consequences of these actions:
 
"'One of the trends that that raises some very delicate issues is the rising tide of in-house counsel as the whistleblower,' said Gregory Keating, a partner at Choate Hall & Stewart who leads the firm's whistleblower practice. 'In my own practice, which is 90% whistleblower defense, I'm seeing a disproportionate number of whistleblowers who are either counsel or compliance officers. ... The trend has only accelerated.'"
 
This trend of an increasing numbers of whistleblowers who are general counsel or compliance officers is important for two reasons. First, it raises challenging issues around attorney-client privilege:
 
"Mr. Keating co-authored a report on the ethical and legal issues raised by having corporate lawyers turn government informant, pointing to court restrictions on the situations where general counsel can bring retaliation claims. … 'It raises some dicey ethical issues because the in-house counsel is responsible for knowing the good the bad and the ugly…but is also able to access and use that information, which is often privileged, as part of a whistleblower proceeding,' Mr. Keating said."
 
Second, as part of the expanded protection for whistleblowers that is gradually becoming established in the U.S., courts are allowing whistleblowers to sue individual members of the board, which raises the stakes for Directors. The case highlighted in the article demonstrates this possibility:
 
"… in California revolves around a general counsel alleging he was wrongfully terminated for pursing a Foreign Corrupt Practices Act investigation in China. … [In the case] a judge allowed him to sue individual board members in his quest for compensation for being fired."
 
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/
 
 
More Company Lawyers Turn Whistleblower
By Stephen Dockery
October 29, 2015
The Wall Street Journal
 

Friday, February 26, 2016

Strategic CSR - 1915

If you ever need some evidence of the power of capitalism to deliver social progress, the image in the link below gives some details on how far we have come in the last 100 years:
 
 
The majority of the points on that list (and the progress we have made since) can be attributed to for-profit firms competing on the basis of self-interest. That self-interest has been defined by stakeholders rewarding firms that meet expectations and punishing firms that do not.
 
Have a great 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/
 

Wednesday, February 24, 2016

Strategic CSR - The People's Index

The article in the url below outlines the idea of a "people's index." The goal is to track corporate performance according to the issues that are of highest priority to the societies in which a company is based. The index is to be launched in Fall 2017 by JUST Capital (http://justcapital.com/) and will track the largest 1,000 U.S. firms:
 
"This idea of a 'people's index' driving more just and balanced corporate behaviour supposes that the greatest pay-off for addressing societal stresses will come from shifting corporate behaviour, not government policy. If firms are forced by the marketplace to be more in synch with the American public's view of 'justness,' the competition for 'goodness' could have a huge impact."
 
The Index is driven primarily by the widening issue of social inequality, but could be applied to any issue of concern/interest to a firm's stakeholders today:
 
"New research conducted by JUST shows that, despite the above, and despite trust in business being close to an all-time low, most Americans agree that what is good for business is good for the country. Moreover, they believe companies can play a positive role in building a more just society, and are willing to give credit to those that try to do so."
 
The principles underlying the Index closely mirror those underlying strategic CSR:
 
"At the heart of the matter is the concept of a rebalancing of corporate interests. JUST's work indicates that, regardless of political ideology or income bracket, the public believes companies are too focused on meeting the needs of shareholders, and have greater obligations to employees, customers, communities and the environment than the firms themselves acknowledge."
 
The Index will be constituted by the "JUST 100" firms out of the largest 1,000 U.S. firms. The goal is that, by highlighting those companies most responsive to their stakeholders' needs, these firms will be more successful in attracting the stakeholder support that is essential for long-term business success:
 
"A large majority of the [40,000 Americans] polled by JUST, across all political ideologies, said that … if information were available it would influence their decision to work for, buy from or invest in that firm. … If only 1% of capital begins to flow in a more just direction, that would mean more than $600 billion a year going towards firms that pay a living wage, provide great benefits, make products that enhance society, protect human rights and the environment, and more. This is the bottom line that really matters."
 
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/
 
 
Just business
By Paul Tudor Jones
November 2, 2015
The World in 2016, The Economist
46
 

Monday, February 22, 2016

Strategic CSR - Apologies

The article in the url below suggests that, for a CEO, any sign of emotion is perceived to be a weakness—at least in the eyes of investors:
 
"Stock market investors have their own feeling about contrition, according to new research: lose it. Two business professors who analyzed more than 100 corporate apologies over three decades through 2012 found that those demonstrating the most emotion also experienced the steepest declines in share price over the following week."
 
In contrast to much of what crisis management teaches (e.g., the need to be honest and open, and empathize), the researchers' advice as a result of their research is to drop the empathy part:
 
"[The researchers] figured the perfect apology would acknowledge responsibility, identify the harm, show a wise character, be delivered in person and on time, display empathy for victims, and promise follow-through. … What the researchers had hoped to prove was that investors valued the most ethically sound apologies. Instead, the strongest finding was the negative reaction to empathy. By contrast, CEOs who identified the problem and took responsibility for it, without any empathy, got a small stock increase."
 
The researchers provided two possible explanations for their findings. In both cases, they paint the motivations of investors in a poor light:
 
"One reason empathy may disturb investors is that it's often considered a feminine trait or a sign of weakness, the researchers speculated. All the apologizers they studied were men. … Another possible interpretation, according to [one of the researchers]: 'If you're showing all that pathos, empathy, and emotional connection with your audience, the stock market might say, 'They're actually going to do something.' And that's going to cost money.'"
 
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/
 
 
CEOs: Apologize, but keep it manly
By Peter Robison
November 16-22, 2015
Bloomberg Businessweek
Late Edition – Final
40
 

Friday, February 19, 2016

Strategic CSR - Natural capital

For those of you out there who are relying on scientific and technical innovation to get us out of our environmental challenges, the article in the url below offers some hope. In this case the problem is a lack of water:
 
"San Diego County is in a drought. San Diego County sits next to the Pacific Ocean, which contains 187 quintillion (that's 187,000,000,000,000,000,000) gallons of cool, fresh, completely undrinkable water."
 
The solution is desalination on an industrial scale:
 
"This vexes San Diego County, vexes them enough to build a $1 billion (that's only $1,000,000,000) state-of-the-art desalination plant that will filter out the salt and provide up to 50 million gallons of drinking water a day."
 
This is not particularly new technology, but applying it to solve a state-wide problem is an important step in the effort to introduce meaningful change. It also is an important step in being able to value our natural resources. While we would hope we could do this without the need to monetize everything, in reality it is when we create a market for something that we are able to understand the extent to which we value it:
 
"While the new Carlsbad desalination plant will contribute only about 10 percent of San Diego County's drinking-water supply, … If the plans succeed, they could convert the Pacific from a really nice thing to look at into a vital natural resource."
 
Have a great 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/
 
 
California's Costly Solution to Make the Ocean Drinkable
By Sam Grobart
November 10, 2015
Bloomberg Businessweek
 

Wednesday, February 17, 2016

Strategic CSR - Facebook

The article in the url below tackles the issue of online privacy, focusing particular on the relationship we have as consumers with social media:
 
"FACEBOOK. Instagram. Google. Twitter. All services we rely on — and all services we believe we don't have to pay for. Not with cash, anyway. But ad-financed Internet platforms aren't free, and the price they extract in terms of privacy and control is getting only costlier."
 
The price the author is referring to is our privacy, which we surrender in terms of the information that we provide in return for the service. The problem, the author argues, is that online ads are not very effective unless they are expertly targeted, which requires a great deal of information about the user:
 
"Mr. Zuckerman points out that Facebook makes about 20 cents per user per month in profit. This is a pitiful sum, especially since the average user spends an impressive 20 hours on Facebook every month, according to the company. This paltry profit margin drives the business model: Internet ads are basically worthless unless they are hyper-targeted based on tracking and extensive profiling of users. This is a bad bargain, especially since two-thirds of American adults don't want ads that target them based on that tracking and analysis of personal behavior."
 
Because, even when targeted, ads do not generate much revenue, only those firms with the largest customer bases can be profitable using this business model. This therefore incentivizes companies to prioritize increasing member numbers and the amount of time each person stays on their website, rather than necessarily developing the best product:
 
"Ad-based businesses distort our online interactions. People flock to Internet platforms because they help us connect with one another or the world's bounty of information — a crucial, valuable function. Yet ad-based financing means that the companies have an interest in manipulating our attention on behalf of advertisers, instead of letting us connect as we wish. Many users think their feed shows everything that their friends post. It doesn't. Facebook runs its billion-plus users' newsfeed by a proprietary, ever-changing algorithm that decides what we see. If Facebook didn't have to control the feed to keep us on the site longer and to inject ads into our stream, it could instead offer us control over this algorithm."
 
The solution that the author offers is for those users who do not want to sacrifice control over their privacy to pay an amount equal to that generated by the online ads:
 
"What to do? It's simple: Internet sites should allow their users to be the customers. I would, as I bet many others would, happily pay more than 20 cents per month for a Facebook or a Google that did not track me, upgraded its encryption and treated me as a customer whose preferences and privacy matter."
 
The argument against a fee-based service is why should the user pay for something they currently get for free. The author argues this logic only holds if you discount the value of the information the user provides in return. A broader definition of 'value' reframes the debate about the costs associated with our use of social media.
 
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 'Free' Really Costs
By Zeynep Tufekci
June 4, 2015
The New York Times
Late Edition – Final
A23
 

Monday, February 15, 2016

Strategic CSR - Stakeholder vigilance

The article in the url below highlights the importance of stakeholder vigilance in shaping corporate behavior. The article summarizes research that is published in an accounting journal identifying how earnings misstatements spread via contagion within an industry:
 
"One bad corporate apple, it seems, can spoil a whole bunch. That's the conclusion of a fascinating academic study that examined accounting restatements by thousands of corporations over a 12-year period. After one company was found to have misstated its earnings, the study determined, others in its industry often followed suit and began massaging their own numbers, ultimately resulting in their own restatements."
 
What is more important, however, is the effect of public naming and shaming on that contagion process:
 
"When companies playing accounting charades faced regulatory action, shareholder litigation or prominent news reports about their practices, the researchers found that their corporate peers declined to mimic their conduct. This shows the importance of highlighting and punishing bad behavior."
 
In other words, when stakeholders stood up and held firms to account, the practices were less likely to spread. For example:
 
"For the three years after Sarbanes-Oxley went into effect, contagion in earnings misstatements disappeared, the academics found. But memories are short. The study provided evidence that the copycat behavior resumed in 2005 and continued through 2008, when the research concluded."
 
There is also plenty of evidence to suggest, therefore, that as the vigilance abated, misbehavior returned:
 
"Class-action lawsuits and news reports critical of manipulative conduct reduce the likelihood that other companies will mimic the behavior, the study found. By contrast, restatements disclosed in a news release that receives little attention tend to encourage others to follow suit."
 
In other words, the important aspect of this research is not that contagion is real (we know that from social networks research), but that the contagion stops when stakeholders intervene and remains stymied when that vigilance is sustained over time.
 
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/
 
 
Cooking The Books In Bunches
By Gretchen Morgenson
October 25, 2015
The New York Times
Late Edition – Final
BU1
 

Friday, February 12, 2016

Strategic CSR - Juxtaposition

This website contains some amazing aerial photography that captures the incredible natural beauty of our planet, as well as the very unnatural impact humans have had upon it:
 
 
and here:
 
 
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/
 

Wednesday, February 10, 2016

Strategic CSR - Blood money

The article in the url below reveals an innovative approach to increasing blood donations (while also reducing the prison population):
 
"Judge Marvin Wiggins's courtroom was packed on a September morning. The docket listed hundreds of offenders who owed fines or fees for a wide variety of crimes — hunting after dark, assault, drug possession and passing bad checks among them. 'Good morning, ladies and gentlemen,' began Judge Wiggins, a circuit judge here in rural Alabama since 1999. 'For your consideration, there's a blood drive outside,' he continued, according to a recording of the hearing. 'If you don't have any money, go out there and give blood and bring in a receipt indicating you gave blood.' For those who had no money or did not want to give blood, the judge concluded: 'The sheriff has enough handcuffs.'"
 
The benefits for people who could not otherwise pay their fines quickly became apparent:
 
"The dozens of offenders who showed up that day, old and young, filed out of the Perry County courthouse and waited their turn at a mobile blood bank parked in the street. They were told to bring a receipt to the clerk showing they had given a pint of blood, and in return they would receive a $100 credit toward their fines — and be allowed to go free."
 
Not surprisingly, forcing poor people to bear the burden of providing essential medical supplies has been widely criticized:
 
"Efforts by courts and local governments to generate revenue by imposing fines for minor offenses, particularly from poor and working-class people, have attracted widespread attention and condemnation in recent months. But legal and health experts said they could not think of another modern example of a court all but ordering offenders to give blood in lieu of payment, or face jail time. They all agreed that it was improper. 'What happened is wrong in about 3,000 ways,' said Arthur L. Caplan, a professor of medical ethics at NYU Langone Medical Center, part of New York University. 'You're basically sentencing someone to an invasive procedure that doesn't benefit them and isn't protecting the public health.'"
 
But, at least someone is innovating to correct for the societal failure to contribute to the broad well-being of the community (in terms of blood donations). Research shows that creative public policy can have a positive effect. For example, a simple opt-out approach to organ donation in Canada (where you participate unless you choose not to do so) has been shown to increase participation greatly over the current opt-in approach employed in the U.S. (where you only participate if you specifically choose to do so). Mind you, if a pint of blood will now keep you out of jail in Alabama, I wonder what you can get for donating a kidney?
 
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/
 
 
For Offenders Who Can't Pay, It's a Pint of Blood or Jail Time
By Campbell Robertson
October 20, 2015
The New York Times
Late Edition – Final
A1
 

Monday, February 8, 2016

Strategic CSR - Public opinion

The article in the url below reports on some encouraging news for those hoping for some meaningful action on climate change from the U.S. government:
 
"Maybe it's the pope. Or the freakish year in extreme climate records. It might even be explained by the United Nations climate talks and the bright lights of the presidential election cycle. Whatever the cause, U.S. views on climate change are shifting—fast."
 
As the article notes, what is interesting about public opinion is not that is it changing, but that it is doing so so quickly:
 
"Three-quarters of Americans now accept the scientific consensus on climate change, the highest level in four years of surveys conducted by the University of Texas at Austin. The biggest shocker is what's happening inside the GOP. In a remarkable turnabout, 59 percent of Republicans now say climate change is happening, up from 47 percent just six months ago."
 
This chart is particularly informative:
 
 
The speed of this change mirrors the rapid evolution of public opinion in the U.S. on gay marriage (Strategic CSR – A Rational Argument for CSR) and stands in contrast to this insightful tweet from Donald Trump on this issue from January, 2014:
 
"This very expensive GLOBAL WARMING bullshit has got to stop. Our planet is freezing, record low temps, and our GW scientists are stuck in ice."
 
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/
 
 
Americans Have Never Been So Sure About Climate Change—Even Republicans
By Tom Randall
October 23, 2015
Bloomberg Businessweek
 

Wednesday, February 3, 2016

Strategic CSR - Greenwash

The article in the url below, about eco-friendly detergents, tells a story about corporate behavior that is the opposite of greenwash – green cover-up, green humility (???). In essence, these companies are pursuing sustainability best practices, but not telling anyone about it:
 
"Industry insiders say that ten to 15 years ago many makers of cleaning products, big and small, used some fairly vicious ingredients, such as chlorinated bleaches, phosphates and ammonia, especially in products to clean drains, ovens and toilets, that polluted the waterways they were eventually sluiced into. More than one-third of the fragrances they used were toxic if ingested. Eco-friendly products were also available at the time, but they were expensive, dowdily packaged and often a lot less effective than the regular stuff. However, things have changed since then, as both chemistry and product design have made significant progress."
 
What is most encouraging about this is that it appears to have been driven by stakeholder demand:
 
"In 2010 less than 20% of American consumers surveyed said they had bought a green cleaning product in the past year; now the figure is almost 30%, says Scot Case of the Natural Marketing Institute, a consulting firm. In 2009 only 15% of consumers surveyed said they would be prepared to pay up to 20% extra for a greener cleaning product; last year the figure was 29%.
At the same time, under pressure from environmental groups and regulators, almost all big makers of cleaning products have tweaked their formulas to drop harmful ingredients, and have managed to do so without losing much effectiveness."
 
Where the story becomes interesting, however, is the companies' position regarding the positive stakeholder response they have received for the product changes they have introduced. This is particularly apparent in terms of the Environmental Protection Agency's (EPA) Safer Choice label:
 
"The odd thing is that although many of the big manufacturers' products would now qualify for the EPA's seal of approval, and for eco-labels from other certifiers such as Green Seal and EcoLogo, the makers often do not bother to apply for them. Nor do they bother to advertise how their products (and for that matter their manufacturing processes) have been made greener. That's because, although a growing proportion of consumers seek out green products, the majority are still more interested in how much they cost and how well they work. The soap giants have perfected their advertising messages over decades to concentrate on these factors, and are loath to change a successful formula."
 
My takeaway: while the combined effect of each firm's stakeholders has propelled the changes so far, consumers are lagging behind. That is, while some consumers understand the ecological value in purchasing more eco-friendly detergents, the majority of consumers are still concerned about cost. In terms of strategic CSR this is OK, but far from ideal. It is OK because other stakeholders can drive change (e.g., NGOs, employees, the government, etc.), but the signals to the firm become confused when stakeholders conflict. The clearest message (and most beneficial outcomes) occur when stakeholder interests align. On the flip side, the fact that some firms are making greener products, but not advertising the fact opens up the market for green-seeking consumers to those firms who are proud of the eco-friendly nature of their products:
 
"As a result, producers of green-badged detergents, like Method, have the market for ostentatious virtue to themselves. They are being truthful in telling consumers that their products are safe and environmentally friendly, but most of their bigger rivals, if they chose to, could say just the same."
 
The only thing for these firms to remember is that this competitive advantage may not be sustainable over time. If consumers as a whole make a sudden shift in favor of environmentally-friendly products, those firms currently being humble about their green credentials will change. At that point, firms like Method had better be sure they have other advantages to differentiate their products in the marketplace.
 
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/
 
 
Green Wash
September 26, 2015
The Economist
Late Edition – Final
69
 

Monday, February 1, 2016

Strategic CSR - COP21

The article in the url below contains a graphic that summarizes very effectively the climate change accord reached at the end of 2015 in Paris:
 
 
It emphasizes the sizeable gap between what was promised and what needs to be done in order to avoid exceeding the 2 degrees limit, let along the 1.5 degrees aspirational target all agree would be preferable. In essence, it was decided that some agreement was better than no agreement, even if the agreement fails to get us anywhere near where we need to be:
 
“… there remains the awkward fact that the [individual country commitments] are not remotely strong enough to ensure the 1.5°C pledge is honoured. This serious flaw was foreordained. The experience of Copenhagen, six years ago, showed that insistence on a pre-set goal would make agreement impossible: in a zero-sum game all players will want others to do more while they do less. Having countries sign up only to what they think they can do made agreement in Paris possible—but ensured that it would be weak. The actions outlined in the Paris pledges would be expected to lead to global warming of around 3°C. Given that there has already been about 1°C of warming, the measures required to stay below 1.5°C would be beyond heroic. Work by Joeri Rogelj of the International Institute for Applied Systems Analysis near Vienna and colleagues suggests that it would mean net emissions having to fall to zero in at most 40 years.”
 
In short, COP21 means we are increasing greenhouse gas emissions less slowly than if the agreement had not been reached. Under current commitments, we are nowhere near containing total emissions, let along reducing them. The logic of COP21 is that a preliminary agreement at least means we can keep talking and hopefully agree to stricter standards at a later date (before it is too late). Based on past performance, that is an exceptionally optimistic outlook.
 
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/
 
 
Green Light
December 19, 2015
The Economist
89