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 28, 2018

Strategic CSR - Amazon

As the article in the url below implies, how is this for creepy?
"What if your employer made you wear a wristband that tracked your every move, and that even nudged you via vibrations when it judged that you were doing something wrong? What if your supervisor could identify every time you paused to scratch or fidget, and for how long you took a bathroom break?"
In the name of ever-greater efficiency, this day is drawing nearer as Amazon expands its reach into every corner of the economy (and our lives):
"What may sound like dystopian fiction could become a reality for Amazon warehouse workers around the world. The company has won two patents for such a wristband, though it was unclear if Amazon planned to actually manufacture the tracking device and have employees wear it."
If you are interested to see what the workplace of the future looks like, the two patents are available here:
You would have thought Amazon would have learned from the withering coverage it received for its "bruising workplace" culture in this profile in The New York Times in 2015:
"At Amazon, workers are encouraged to tear apart one another's ideas in meetings, toil long and late (emails arrive past midnight, followed by text messages asking why they were not answered), and held to standards that the company boasts are "unreasonably high." The internal phone directory instructs colleagues on how to send secret feedback to one another's bosses. Employees say it is frequently used to sabotage others. (The tool offers sample texts, including this: 'I felt concerned about his inflexibility and openly complaining about minor tasks.')"
Instead, given its rapid expansion, fawning attention over its HQ2 decision, and share price that defies gravity (and common sense), the message it is getting from its stakeholders is to keep on going. Apparently, its employees are just happy to be working there and the rest of us don't care if their privacy and/or security is threatened. Frederick Taylor would be impressed with the extrapolation of his work over a century ago:
"In theory, Amazon's proposed technology would emit ultrasonic sound pulses and radio transmissions to track where an employee's hands were in relation to inventory bins, and provide 'haptic feedback' to steer the worker toward the correct bin. The aim, Amazon says in the patent, is to streamline 'time consuming' tasks, like responding to orders and packaging them for speedy delivery. With guidance from a wristband, workers could fill orders faster."
Take care
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Track Hands of Workers? Amazon Has Patents for It
By Ceylan Yeginsu
February 2, 2018
The New York Times
Late Edition – Final

Monday, February 26, 2018

Strategic CSR - Uber

The article in the url below does a good job of quantifying the effects of the gig economy on individual earnings:
"How much money do Uber drivers really earn? Since launching in 2009, the company has often changed its pricing model, and the amount of money Uber drivers make has shifted as well. Yet the company has become so large, and been studied so much, that a clearer picture has emerged of what a driver can truly expect to make."
The data summarized in the article comes from a lending company, Earnest, which drew upon loan data where applicants had reported the income they earn from Uber-like jobs. The results do not include information on whether the income is gross or net; or how many hours it took to earn the income:
"Earnest found that the median Uber driver makes $155 a month — third most among the nine gig platforms surveyed. (People working with Airbnb and Lyft tended to earned more.) Meanwhile, the average Uber driver makes $364 a month — fourth most — suggesting some drivers are taking home the lion's share of possible earnings."
Additional studies are also summarized and reveal some fascinating data. There are some great graphics in the article. Here is one comparing earnings across different firms in the sharing economy:
Here is another that breaks down earnings for Uber/Lyft drivers by age group:
And, here is another one showing earnings for Uber/Lyft drivers, by state and per trip, across the U.S.:
Other studies reveal the variations among drivers across cities:
"For even more background on how much Uber drivers make, consider a 2015 study funded by Uber, which found that in its top-20 cities drivers averaged more than $19 an hour in earnings before expenses. However, a year later, internal Uber figures provided to Buzzfeed showed that after expenses were factored in, drivers in three markets — Detroit, Houston, and Denver — earned only $8.77, $10.75, and $13.17 per hour, respectively."
A key question the article doesn't raise, though – does the flexibility offered by such jobs outweigh the relative insecurity/low wages on offer? When I travel in an Uber car, I often ask the driver what s/he thinks about working for Uber. The most common answer I get is that they do not want to be an 'employee' and welcome the flexibility that Uber offers them. If so, are we (society as a whole) best served by letting these people structure their work lives as they wish, or by stepping-in to constrain them 'for their own good'? In other words, in a freely voluntary exchange of labor for money, is the driver working for Uber because s/he has to or because it provides them with the flexibility they otherwise cannot find in other jobs that may pay more (and include benefits), but ultimately are deemed to be less fulfilling?
Take care
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Here's How Much Uber Drivers Really Make
By Rob Wile
July 10, 2017

Thursday, February 22, 2018

Strategic CSR - Guns

At first glance, the article in the url below contains an interesting proposal – that the credit card companies prohibit the purchase of guns using their products:
"Here's an idea. What if the finance industry — credit card companies like Visa, Mastercard and American Express; credit card processors like First Data; and banks like JPMorgan Chase and Wells Fargo — were to effectively set new rules for the sales of guns in America? Collectively, they have more leverage over the gun industry than any lawmaker. And it wouldn't be hard for them to take a stand."
The idea is that, by prohibiting gun sales using Visa and MC, the stores would be faced with either accepting credit cards or selling guns, but could not do both. The effect, the author believes, would be to remove guns from most stores across the country:
"For example, Visa, which published a 71-page paper in 2016 espousing its 'corporate responsibility,' could easily change its terms of service to say that it won't do business with retailers that sell assault weapons, high-capacity magazines and bump stocks, which make semiautomatic rifles fire faster. … If Mastercard were to do the same, assault weapons would be eliminated from virtually every firearms store in America because otherwise the sellers would be cut off from the credit card system."
Although interesting, the logic on which this idea is based is flawed. The author uses Bitcoin as an example of the credit card companies' ability to enact the changes he is proposing:
"There is precedent for credit card issuers to ban the purchase of completely legal products. Just this month, JPMorgan Chase, Citigroup and Bank of America banned the use of their cards to buy Bitcoin and other cryptocurrencies. To be clear: Those three banks won't let you use your credit card to buy Bitcoin, but they will happily let you use it to buy an AR-15-style semiautomatic rifle — the same kind of gun used in mass shootings in Parkland; Newtown, Conn.; San Bernardino, Calif.; Las Vegas; and Sutherland Springs, Tex."
But, the primary reason Visa and MC ban Bitcoin purchases is risk mitigation. Bitcoins are a very risky investment. If I use my credit card to buy Bitcoin that then crashes in value, how am I going to repay my debt to the credit card companies? The comparison to purchasing a legal product for regular consumption is not valid (it would only be valid if the credit card companies could be sued if their cards were used to buy guns that later were used in a mass shooting, which is an interesting idea, but another story). If the credit card companies were to take the author's advice and start selecting which legal products to block, their task would never end. Tobacco kills ten times as many people in the U.S. as guns every year, should they prevent those products being bought? Alcohol is another big killer. What about cars, which kill tens of thousands of people every year in the U.S.? Or fast food, candy, or sodas, which all contribute significantly to a variety of health-related issues and premature deaths? The list is potentially endless. Blame is being misapplied here. More specifically, the burden of trying to find a solution is being conveniently shifted. This is not the credit card companies' problem to solve. It is our problem, together, as a society. If anything is to change regarding gun laws in the U.S., it is legislators that will need to take the lead, but that lead will need to come from us. If we say we support such action, then we need to vote for politicians who actually might do something about it. As Thomas Friedman puts it in the article in the second url below:
"… ultimately, nothing will change unless young and old who oppose the N.R.A. run for office, vote, help someone vote, register someone to vote or help fund someone's campaign — so we can threaten the same electoral pain as the National Rifle Association. … This is not about persuading people with better ideas. We tried that. It's about generating raw electoral power and pain."
In short, we need to follow the inspiring leadership of the Parkland, FL high school students most affected by this most recent tragedy and shame politicians into acting. They are a great example of what I would call engaged stakeholders!
Take care
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Congress Fails to Curb Guns. Could Banks?
By Andrew Ross Sorkin
February 20, 2018
The New York Times
Late Edition – Final
By Thomas L. Friedman
February 21, 2018
The New York Times
Late Edition – Final

Monday, February 19, 2018

Strategic CSR - Jobs

The article in the url below does a good job of framing the threats posed to specific jobs over the next few years:
"Thirteen years ago, two prominent U.S. economists wrote that driverless cars couldn't execute a left turn against oncoming traffic because too many factors were involved. Six years later, Google proved it could make fully autonomous cars, threatening the livelihoods of millions of truck and taxi drivers. Throughout much of the developed world, gainful employment is seen as almost a fundamental right. But what if, in the not-too-distant future, there won't be enough jobs to go around? That's what some economists think will happen as robots and artificial intelligence increasingly become capable of performing human tasks. Of course, past technological upheavals created more jobs than they destroyed. But some labor experts argue that this time could be different: Technology is replacing human brains as well as brawn."

The article provides several graphics that compare types of jobs (goods vs. services), different industries (e.g., telecommunications vs. newspapers), and the effects of education (the less education, the greater risk). One graphic, in particular, though stood out – it compared the amount of jobs lost in the coal industry versus the number of jobs lost in the retail industry:

"In the U.S., for example, department stores employ 25 times more workers than coal mining companies. And as customers increasingly purchased goods via the internet, average employment in the first four months of 2017 was down 26,800 from the same period a year earlier, against just 2,800 job losses in coal."

Those are not the numbers you would expect given the amount of political and media attention devoted to the coal industry. John Oliver also touched on this subject in one of his shows last summer. Enjoy!

In spite of the fear mongering, the article concludes by reminding us that predicting the effects of technological innovation is far from a science. In reality, we are only guessing about how current technologies will affect future employment, let alone the effects of technologies that have yet to be invented:

"There's ample room for skepticism. U.S. productivity growth has been slow, exactly the opposite of what one would expect if robots were taking over. Also, advances in artificial intelligence could end up focusing mostly on specific tasks rather than entire jobs, augmenting rather than replacing humans. That said, history teaches us that it's hard to predict how technological change will unfold. Even if, as some economists predict, new jobs and industries eventually replace those being automated, large portions of the global workforce may need retraining. And if work becomes a luxury, widespread joblessness and greater inequality could redefine the challenge of ensuring a social safety net."
It is worth keeping all of this in mind as we sift through the various doomsday articles about this issue.
Take care
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Is Your Job About to Disappear?
By Mark Whitehouse, Mira Rojanasakul, and Cedric Sam
June 22, 2017
Bloomberg Businessweek

Friday, February 16, 2018

Strategic CSR - Girl Scout cookies

The article in the url below discusses the value to Girl Scouts in selling cookies to raise funds – an annual ritual here in the U.S.:
"Selling Girl Scout cookies is meant to accomplish more than just distributing Samoas and Thin Mints to the world. Ideally, the girls would learn about setting goals, teamwork, money management and communicating with adults, among other things."
But come on, it is also about sales, right? And for that, you need to demonstrate true entrepreneurial spirit – the key is to identify those customers who are most likely to have the greatest demand:
"If the girls can develop some business acumen, all the better. And one young scout in San Diego has received nationwide plaudits for her shrewd entrepreneurial sense, setting up shop last week outside a marijuana dispensary. The girl … sold more than 300 boxes in six hours, her father told ABC 10. Boxes now sell for as much as $5 in parts of the country, so she probably raised more than $1,500. Yes, there's money in the munchies."
While this Girl Scout clearly has a bright future ahead of her, the Girl Scouts organization is struggling as to how best to respond:
"While some have praised the plucky scout for figuring out where the demand would probably be, the Girl Scouts organization has been wrestling with how to handle marijuana-adjacent sales as more states have legalized the drug. … There are no nationwide policies related to marijuana dispensaries."
Have a good weekend
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Girl Scout Has Lesson In Business For Us All
By Daniel Victor
February 9, 2018
The New York Times
Late Edition – Final

Wednesday, February 14, 2018

Strategic CSR - Business

Here is an inflammatory quote for you:
"When I visit university campuses, I'm periodically asked if students who seek jobs in the business world are immoral, money-grubbing sellouts. I don't think they are, for businesses can be a hugely important force for progress. Can be, but usually aren't."
The author continues:
"Tycoons always claim to cherish ordinary people's best interests even as they rip them off. American tobacco executives have killed more people than Stalin managed to, and pharma executives recklessly peddling opioids may have killed as many people as Colombian drug lords, yet these business leaders sometimes seem to get moist-eyed describing the work they do."
I am a big fan of The New York Times, and Nicholas Kristof, in particular, does wonderful work exposing many of the horrors that humans are capable of inflicting on each other. He has been brilliant, for example, in pursuing those (in politics and business) who allow human trafficking to perpetuate. In this case, however, he is so far off the mark as to be embarrassing. Invoking "Stalin" and "Colombian drug lords" might be a good way of drawing attention to your article, but it is not a particularly level-headed approach to assessing the societal impact of business (all businesses).
There is the general point about the extent to which for-profit firms have shaped societal progress in a way that allows us to do so much more today with the same amount of resources. There is the more specific point about tobacco and pharmaceuticals. First, these are legal products that, at some point, society has decided it wants. As such, politicians are just as culpable for any errors as businesses. Second, there is clearly consumer demand. While the role of addiction clearly cannot be dismissed, apparently there are people out there who enjoy smoking, too. And, in terms of opioids, you cannot ignore the benefit these drugs have brought to the management of pain; the medical community has also played a role in over-proscribing drugs that they should have known more about. And, while I am thinking of it, where was the media in exposing this problem much earlier? I am not giving anyone a free ride here; merely pointing out that there is plenty of blame to go around.
In the bigger picture, however, it is not reasonable to highlight a couple of major abuses and then tar the whole business community with the same brush. As well as causing major harm, businesses do immense good. More specifically, firms give us what we want. If we want different outcomes, we have to demand them. Consumers do that by paying for what they want, but regulators do that by enforcing laws on their books, and the media does that by holding firms to account (which includes promoting 'good' behavior when they see it). If the collective set of stakeholders fail to do that, or say they want one thing but then incentivize something completely different, the blame lies with all of us (collectively), not an arbitrary organization that, after all, is made up of individuals making decisions. The article in the url below demonstrates that Kristof is so blind to this that it is seriously affecting his judgment. I might even go as far as to say this column borders on being fake news, falling way below the Times' normal high standards.
Take care
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Is the Business World All About Greed?
By Nicholas Kristof
January 25, 2018
The New York Times
Late Edition – Final

Monday, February 12, 2018

Strategic CSR - 100% renewable energy

The article in the url below raises the question: Is it possible to get to 100% renewable energy and, if so, at what cost? The article's starting point is a realistic assessment of the current situation. In spite of what you might have read about new renewable capacity last year being roughly the same as conventional fuel sources, all that means is that the gap is no longer getting larger. In reality, the vast majority of our fuel still comes from carbon-based sources, and will do for some time:
"Despite falling costs, wind and solar still produce only 5.5% of the world's electricity. Hydropower is a much more significant source of renewable energy, but its costs are rising, and investment is falling. Looking more broadly at energy demand, including that for domestic heating, transport and industry, the share of wind and solar is a miniscule 1.6%. It seems impossible to eliminate fossil fuels from the energy mix in the foreseeable future."
There is a lot of good detail in the article, for those wanting to know more. Ultimately, however, the article concludes that 100% sourcing of renewable energy is probably not possible and, if it is, it is probably not worth the cost of achieving it:
"The Senate in California, a state that is close to hitting its goal of generating one-third of its power from renewables by 2020, has proposed raising the target to 60% by 2030; Germany's goal is to become 80% renewable by 2050. But whether it is possible to produce all of a country's electricity with just wind, water and hydro is a subject of bitter debate."
More realistic is something like 80%, with other clean-ish fuels (like natural gas) making up the difference. Rather than investing large amounts to get beyond 80%, there are many more productive investments to be made in other areas of the economy, such as designing more energy efficient buildings. Ultimately, the goal must be to eradicate the majority of current and future emissions of greenhouse gasses (in particular, carbon dioxide) and then begin to remove past emissions from the atmosphere (e.g., carbon capture technology). The means by which this is achieved are less important. As such, governments should put in place a tax on carbon, incentivizing the market to develop the most cost-effective solution given our current technical knowledge.
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At what cost?
July 15, 2017
The Economist

Thursday, February 8, 2018

Strategic CSR - Sharing economy

The article in the url below sheds light on China's sharing economy. On the surface, the sharing economy in China is expanding at a rate that is almost incomprehensible in the West:
"Three years ago, bike-sharing didn't exist in China. Today more than 40 companies offer the service. And the top two alone, Mobike and Ofo, handle more than 50 million rides every day, solving the 'last mile' problem of getting people from public transportation to their homes."
As a result of this rapid expansion (or perhaps the reason it has been permitted), the Chinese government has now adopted the 'sharing economy' as a centerpiece of the country's economic development:
"The state-run press agency, Xinhua, has trumpeted bike-sharing as one of China's 'four great new inventions.' (The other three are mobile payments, e-commerce and high-speed rail.) It may sound absurd to compare a dockless bike to the world-changing inventions of China's past: paper, gunpowder, the compass and movable type. But the boast conveys the importance that Beijing assigns the 'sharing economy' in helping China make the leap from a manufacturing-based to a service-oriented economy. Last year, according to government figures, China's sharing economy accounted for more than $500 billion in transactions involving roughly 600 million people. (An estimated 55 million Americans will use a sharing service this year, according to a CBS report.) And with Beijing planning on an annual 40 percent growth rate, officials are commanding this new economic engine to account for 10 percent of the national gross domestic product by 2020 and 20 percent by 2025."
Digging deeper, however, the author highlights the differences between how the sharing economy is defined and how it is practiced:
"China's sharing economy has veered sharply away from how the term was originally defined: as a peer-to-peer exchange of underutilized goods and services. In China, 'sharing' now means almost any short-term rental of a product or service activated by a smartphone. Moreover, the things on offer, like Ofo's 6.5 million bikes, are not spread out among individuals but are owned by the tech companies themselves. The same is true for the spoils, from revenue to data. As a result, the ideals that still animate the concept in many other places — the reallocation of unused resources and the community that forms around it — are essentially absent in China."
What I found interesting about the article, however, was the underlying reason for the Chinese government's fixation with the sharing economy:
"Robin Li, the chief executive of the internet giant Baidu, said last year that 'the idea of a sharing economy is quite similar to that of a communist society,' because both focus on 'distribution according to need.'"
The problem with this is that it runs into the reality of human nature that, even in post-Communist contemporary Chinese society, suggests the 'sharing economy' may be more about convenience than 'need,' let alone trust:
"The prize for puffery, however, goes to The People's Daily, the Communist Party mouthpiece, which in August celebrated umbrella-sharing enterprises as 'a show of human care, releasing the warmth of the city.' A few weeks after that, nearly all 300,000 umbrellas distributed by a new company called Sharing E Umbrella had been either lost or stolen."
In reality, I think the term is also being stretched in the West. Now, it seems, most Uber/Lyft drivers treat the service they provide as a job, rather than 'sharing' an under-used asset with a stranger, while most Airbnbs seem to be investment properties, rather than someone's couch or spare room. Whether this matters, of course, is another thing. At a minimum, the 'community' that underpins the sharing economy suffers and the technology that founded it becomes merely another platform to bring together buyers and sellers. I remember back to the .com boom around the turn of the century when a company's share price would jump if the company changed its name from Widgit Inc. to The same is happening today with cryptocurrencies, while stories abound about excessive capital flooding Silicon Valley startups seeking returns in a low-interest rate world. While this reduces the importance of the stock market as a means of raising capital (a good thing), it is hard to escape the feeling that there are lots of flimsy ideas floating around fueling speculative bubbles.
Take care
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China's Revealing Spin on the 'Sharing Economy'
By Brook Larmer
November 26, 2017
The New York Times Magazine
Late Edition – Final

Monday, February 5, 2018

Strategic CSR - The Big Me

Over the break, I read David Brooks 2015 book, The Road to Character. I had been meaning to get to this for a while, not least because I use an NPR interview with Brooks about the book in the strategic management class I teach on values:
The book emphasizes the importance of building a character-based moral life, mostly via profiles of people who have lived such lives (e.g., Ida Stover Eisenhower, mother of Dwight Eisenhower, or George C. Marshall). Brooks refers to this moral life as one that is "internally-oriented," rather than "externally-oriented." The difference is in how you conduct yourself on a day-to-day basis. To live an externally-oriented life, for example, it is necessary to "cultivate your strengths" and seek recognition for those strengths in objectively-acknowledged achievements (i.e., cv-building). In order to live an internally-oriented life (a life of character), however, it is instead essential that we "confront our weaknesses" and use the lessons learned to build loving, trust-based relationships.
As well as profiling various upstanding people, Brooks spends a lot of the book building an argument about the extent to which we have moved away from raising children to idealize values and, instead, to focus on meritocratic achievement – what he terms the culture of "the big me." Here are just a few of the statistics Brooks uses to demonstrate how our priorities, as a society, have changed during this shift: 
  • "… in 1950, the Gallup Organization asked high school seniors if they considered themselves to be a very important person. At that point, 12 percent said yes. The same question was asked in 2005, and this time it wasn't 12 percent who considered themselves important, it was 80 percent." (p6)
  • "The median narcissism score has risen 30 percent in the last two decades. Ninety-three percent of young people score higher than the middle score just twenty years ago. … Fame used to rank low as a life's ambition for most people. In a 1976 survey that asked people to list their life goals, fame ranked fifteenth out of sixteen. By 2007, 51 percent of young people reported that being famous was one of their top personal goals." (p7)
  • "In 1966, only about 19 percent of high school students graduated with an A or A- average. By 2013, 53 percent of students graduated with that average, according to UCLA surveys of incoming college freshmen. Young people are surrounded by so much praise that they develop sky-high aspirations for themselves. According to an Ernst & Young survey, 65 percent of college students expect to become millionaires." (pp.254-255)
The consequence for the CSR debate is that we are building weaker communities. In their place, we are instead fostering a stronger sense of individual self-worth – the idea that I do not need others because I am capable of generating 'the best answer' on my own:
"But if you proudly believe the truest answers can be found in the real you, the voice inside, then you are less likely to become engaged with others. Sure enough, there has been a steady decline in intimacy. Decades ago, people typically told pollsters that they had four or five close friends, people to whom they could tell everything. Now the common answer is two or three, and the number of people with no confidants has doubled. Thirty-five percent of older adults report being chronically lonely, up from 20 percent a decade ago. At the same time, social trust has declined. Surveys ask, 'Generally speaking, would you say that most people can be trusted or that you can't be too careful in dealing with people?' In the early 1960s, significant majorities said that people can generally be trusted. But in the 1990s the distrusters had a 20-percentage-point margin over the trusters, and those margins have increased in the years since."
There needs to be a strong "S" in "CSR." It is essential to define the boundaries of acceptable behavior within which corporations can be held to account, but those boundaries need to be defined by the group, together, not a bunch of atomistic individuals, separately. Without the strong S (i.e., social/society), there is nothing for corporations to be responsible to.
Take care
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