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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Friday, March 30, 2018

Strategic CSR - Plastic

It never ceases to amaze me how much we know about the damage we are doing to the planet and, in light of that knowledge, how little we are doing to rectify that damage. The statistics that I include in the CSR Newsletter are usually just the most eye-catching of the articles I read on this topic. There are many more that are equally depressing. Whatever else can be said about the climate change debate, no one can say that we weren't warned. The article in the url below continues that trend, discussing the amount of plastic we produce and how, even though we fully understand the pollution it is causing, we are only ramping-up the amount of plastic in our lives. The amounts are staggering:
"The global plastic binge which is already causing widespread damage to oceans, habitats and food chains, is set to increase dramatically over the next 10 years after multibillion dollar investments in a new generation of plastics plants in the US."
How much, exactly?
"Fossil fuel companies are among those who have ploughed more than $180bn since 2010 into new 'cracking' facilities that will produce the raw material for everyday plastics from packaging to bottles, trays and cartons. The new facilities – being built by corporations like Exxon Mobil Chemical and Shell Chemical – will help fuel a 40% rise in plastic production in the next decade."

According to a graphic in the article, we now produce 300 million tons of plastic a year. To put that in perspective:
"The amount of plastic produced in a year is roughly the same as the entire weight of humanity."
And we have been doing this for a while now:
"… humans have produced 8.3bn tonnes of plastic since the 1950s, with the majority ending up in landfill or polluting the world's oceans and continents. The report warned that plastic, which does not degrade for hundreds of years, risked 'near-permanent contamination' of the earth."
This is a topic that The Guardian has been pushing for a while:
"In June a Guardian investigation revealed that a million plastic bottles are bought around the world every minute with most ending up in landfill or the sea."
The article argues that the current expansion in plastics production is driven by the shale gas boom in the U.S.. With cheaper, more readily available fossil fuels (and without an adequate carbon tax in place), plastic becomes more efficient to produce in larger quantities. In a sign of the permanent nature of the damage being done, the plastic residue being deposited in the sediment that will be discovered by future geologists was one of the two defining criteria (along with nuclear fallout) for the declaration that we have entered a new epoch (see Strategic CSR – Anthropocene).
Have a good weekend
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$180bn investment in plastic factories feeds global packaging binge
By Matthew Taylor
December 26, 2017
The Guardian

Monday, March 26, 2018

Strategic CSR - Unilever

I don't understand the difference between a social enterprise and a for-profit firm. Take this example from the article in the url below about the founding of Unilever:
"To most of Unilever's customers, the state of the world is probably the last thing on their minds as they push their shopping carts through the supermarket, tossing in Ben & Jerry's ice cream, Dove soap, Lipton tea, Hellmann's mayonnaise, and other Unilever products. It's hard to imagine that eco-disasters might someday lead to those items disappearing from shelves. But to Unilever, which was born as a solution to a crisis, the potential for calamity seems real enough. The company got its start in the 1880s, right here in this picture-perfect redbrick village near Liverpool called Port ­Sunlight—named after the world's first packaged, branded bar of soap and the company's founding product. It was created in an effort to stop rampant epidemics and child deaths amid the grinding poverty and squalor of Victorian England. Nearly 130 years later, there is still an acute sense at Unilever that the world needs fixing."
How is Unilever not a social enterprise? The firm uses market forces to solve societal problems, just like all for-profit firms. In contrast, take this example of TOMS Shoes (see Strategic CSR – TOMS Shoes), which is usually described as a social enterprise. It is essentially the same thing (an organization using market forces to solve a societal problem), but just not as effective as Unilever. At best, the value TOMS is adding seems dubious; in fact, it might be doing more harm than good:
"Did you buy TOMS shoes because you want to make the world a better place? If so, you should be a little mad. TOMS, of course, is an accessory company that markets itself like a charity … When someone buys a pair of TOMS shoes in the US, for instance, the company donates a pair of shoes to a child in a poor country like Haiti. … But TOMS and the many other companies like it are the charitable equivalents of yes men. They're telling you what they think you want to hear in order to get what they want (for you to purchase trendy, pricey accessories), not what you need to hear in order to do what you want (to have your purchase to do as much good in the world as it can)."
CSR advocates talk about the need for companies to "do good" instead of focusing on profit as if economic problems and social problems are independent of each other. However, a simple thought experiment highlights the overly-simplistic nature of this forced dichotomy. Is feeding people a social problem or an economic problem? Of course, there are hundreds of for-profit food manufacturers (not to mention the hundreds of thousands of restaurants) that produce food and distribute it widely (and efficiently) to whole populations of people. What about clothing people—a social problem or an economic problem? A visit to the shopping mall will quickly reveal how efficiently for-profit firms have essentially eradicated the supply of clothes as a challenge for all but the most deprived societies. Or, what about providing internet access to every household in the country—economic or social? Certainly, you could make an argument that, today, a family is essentially excluded from many aspects of society if it cannot get online; yet, internet provision in most developed economies is the sole responsibility of the private sector (as it is for the food and apparel industries).
Strategic CSR argues that for-profit firms are the best hope we have to institute change on the scale and speed necessary to make a difference. I tell my students, if you want to "do good" in the world, join a corporation. So-called social enterprises make us feel good, but are more akin to rearranging the deckchairs on the Titanic.
Take care
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Unilever CEO Paul Polman's Plan to Save the World
By Vivienne Walt
February 16, 2017

Wednesday, March 21, 2018

Strategic CSR - Fake news

The article in the url below suggests that placing all the blame for 'fake news' on Facebook, YouTube, and Twitter might have been misplaced. It appears that our willing gullibility also played an important role in the process:
"What if the scourge of false news on the internet is not the result of Russian operatives or partisan zealots or computer-controlled bots? What if the main problem is us?"
It seems that we might actually prefer clear-cut fake news, rather than the messy complexity of real life:
"As a result, false news travels faster, farther and deeper through the social network than true news. [Research] found that those patterns applied to every subject they studied, not only politics and urban legends, but also business, science and technology."
And, in the race for people's attention, it is not very close between fact and fiction:
"False claims were 70 percent more likely than the truth to be shared on Twitter. True stories were rarely retweeted by more than 1,000 people, but the top 1 percent of false stories were routinely shared by 1,000 to 100,000 people. And it took true stories about six times as long as false ones to reach 1,500 people."
This finding is robust to the malign influence of foreign software influences:
"Software robots can accelerate the spread of false stories. But the M.I.T. researchers, using software to identify and weed out bots, found that with or without the bots, the results were essentially the same."
The article gives many more examples to support its conclusion. While it is good to have empirical support for this, it is also not very surprising and fits into the general claim that we get the companies we deserve (just like we get the politicians we deserve) – by extension, I suppose, we get the social media we deserve. The only encouraging conclusion reached by the researchers is that the influence of fake news might not be as great as we fear. The more worrying implications, however, are that we are not consciously shaping our society, it is more like we are defaulting to our lowest common denominators. If the majority succumb to their worst impulses (whether through laziness or ignorance) and abdicate their role in shaping a better society for everyone, it is hard to see how we can tackle the bigger, more consequential problems we face, such as building a more sustainable economy.
Take care
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Why We're Easily Seduced by False News
By Steve Lohr
March 9, 2018
The New York Times
Late Edition – Final

Monday, March 19, 2018

Strategic CSR - GDP

The article in the url below is a great example of why there needs to be more economists engaged in the CSR debate. On the surface, the article is a review of a recent book by David Pilling of the FT, Growth Delusion, that argues against GDP as a measure of national economic wellbeing:
"Like most other offerings in this genre, David Pilling's 'The Growth Delusion' celebrates the predicted demise of our headline measure of how well the economy is doing—and along with it the end of Western capitalism's obsession with 'endless' production and consumption."
The reviewer rebuts the charge that such weaknesses have been ignored by economists, instead suggesting they are well known:
"From the start, prominent critics underlined the failure of GDP to account for the environmental costs of economic growth, a theme struck most forcefully in the 1972 Club of Rome report 'The Limits to Growth.' Less prominently, although no less accurately, feminist scholars highlighted GDP's failure to account for economic value created in the home—which meant that post-1950s GDP and productivity growth statistics were flattered by the new tendency of women to take paid work and purchase items such as microwaves and ready meals. … The people who work with GDP data know, far better than most, how much uncertainty arises from compiling the statistics, seasonally adjusting them and comparing them over time or across countries."
The environmental harm of our current economic model is, of course, well documented. There are other interesting questions raised in the review, such as whether there is any measurable improvement in the economy by "merely shifting the economic value of production in the home into the marketplace." The reviewer's point, however, is that it is easy to criticize. The challenge, of course, is coming up with a better measure that serves our economic needs more effectively. And this, according to the reviewer, depends on how you respond to this central question:
"Is economic welfare better served by a high level of output and consumption or is it necessary for it to grow?"
The reviewer builds the compelling case that, in order to consider dethroning GDP as our primary measure of economic activity, it is important that critics understand what it actually does and why we focus on change in GDP, rather than overall GDP. To this point, the reviewer raises what she thinks is the crux of the debate:
"In other words: Why does momentum matter? Portugal and Greece have similar levels of GDP per capita now, but after 2007 Greece had a massive boom and then a bust. Greeks have had the extra interim output, but it is not obvious they have had the better experience. The point about Japan is similar: At its level of prosperity, does it need more growth? Is it terrible to be a rich, contented, safe country, where people have long life expectancy, a magnificent culture and high quality services, simply because the chosen measure of total economic output is static?"
The answer to this question is central to understanding what GDP does and is, therefore, a direct critique of the title of the book under review:
"The answer lies in the fact that GDP—or any alternative aggregate measure—aims to encapsulate the constant innovation and betterment of life driven by competition in market economies. No single number will do it perfectly. Indeed, a new critique of GDP recently has joined the old ones—namely that it fails to capture the role of new technology in our increasingly digital economies. The concept of GDP, an aggregate measure of output at market prices, does not account for all the value of innovations. Yet over time an increase in GDP is the result of innovation, and so to argue against growth is to argue for an end to innovation. Those who think growth is 'delusional' need to explain what they think should be taken away from people when a new product or service they want comes along, to prevent GDP from growing."
In other words, it is not that GDP implies growth when there really is none (i.e., a "Growth Delusion"), but that it captures innovation and creativity in a society. In other words, it captures progress in its widest sense. If progress equals 'value-added,' then an increase in GDP is an imperfect measure of the growth in overall value created. This review acknowledges that GDP is imperfect, but also that it has so far turned out to be the best measure we have of value creation, society-wide. As such, proposed changes should be incremental, based on this core understanding of what GDP is and what it does, rather than the radical reform that is suggested by the book being reviewed, or other high-profile projects, such as the move to measure Gross National Happiness (
Take care
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Dismal Statistics
By Diane Coyle
February 5, 2018
The Wall Street Journal
Late Edition – Final

Wednesday, March 14, 2018

Strategic CSR - Bribery

If a government passes anti-bribery legislation but then fails to enforce it, does it really care about preventing bribery? The article in the url below reminds us that the enforcement of existing rules and regulations is a choice and that different administrations will put different emphases on different laws according to their own priorities/values/ethics:
"U.S. antibribery enforcement regressed to its mean after a record-setting spike in 2016, according to a report released Tuesday by business antibribery group Trace International."
It is also worth remembering, however, that the level of commitment is a relative measure that varies both within and among countries:
"The U.S. brought 14 foreign bribery cases in 2017, a decline by more than half from the 29 posted a year earlier but roughly in line with the average of the past decade, the group reported. Still, the U.S. brought more cases in 2017 than all other countries combined, Trace said."
So, while the U.S. might not care as much as it used to, or as much as it is possible to care, it still may care more than other countries. So, what does this say about our own commitment to preventing bribery, and our own commitment relative to the commitment of others?
"Europe is a focus for U.S. authorities; U.S. probes involving bribes paid by foreign companies and individuals predominately focus on European countries, the study found. Twenty percent of investigations concerning bribes paid by U.S. companies related to payments to European officials, Trace said. … The U.S. has brought more than two-thirds of the foreign-bribery enforcement cases worldwide over the past 40 years but other countries are starting to pick up the pace."
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U.S Pace of Bribery Enforcement Slows
By Samuel Rubenfeld
March 13, 2018
The Wall Street Journal

Monday, March 12, 2018

Strategic CSR - Corporate activism

The article in the url below comments on the recent surge in corporate activism on a range of issues that firms suddenly find themselves having to help solve:
"In the weeks since the Parkland school shooting, big U.S. companies have found themselves in a familiar position: pressured to act on controversial social and political issues where government won't. It's a trend currently manifested by firms cutting ties to the National Rifle Association and efforts by large investors to reduce exposure to gun-makers. But with U.S. politics more polarized than ever, moving forward on issues that Washington has failed to tackle is increasingly routine for corporate America, from coastal tech giants like Alphabet Inc. to heartland icons including Walmart Inc."
One assumption that underpins this argument, therefore, is that it is the government that is the super-ordinate entity and companies are subservient to it. In other words, the government 'should be' taking the lead and, when they don't, companies 'have to' step up:
"Whether that means more generous benefits for working mothers, support for politically vulnerable groups, or intensifying efforts to fight climate change, companies are stepping into a void once filled by political rhetoric and leadership."
In the Strategic CSR framework, it is the other way around. The government is a stakeholder in the company and brings pressure to bear via regulation. The company is the preeminent organizational form in a capitalist society and all other organizations are subservient. They have their role, but it is the for-profit firm that creates the most value in society:
"There are a variety of reasons companies are taking on the additional costs -- including the bottom line. Consumers, employees, and to some extent even shareholders are newly insistent that companies adopt progressive policies. Some 60 percent of consumers in the U.S. and U.K. say their decisions have been influenced by a company's politics, according to research by public relations firm Weber Shandwick; among them, buying products to show their support is an increasingly popular response."
In this framework, firms 'should be' reacting to the signals/demands/expectations sent by their stakeholders - including the government, but also consumers and everyone else, too. It is central to the job of the manager to understand these expectations. This is difficult. What makes it more so is that the goal should be to remain just a little bit ahead of these evolving demands. What is important, however, is that this is not new. Society has always made claims on firms, from environmental pollution, to the minimum wage, to healthcare and pensions, and today it is guns and gender and sexual equality. As societies become more affluent, the nature of their expectations evolves:
"Polling data suggest that millennials, who will make up 50 percent of the global workforce by 2020, are more attuned to social and environmental issues than their elders. A 2016 study of young employees by Boston-based Cone Communications found that 76 percent consider a company's social and environmental commitments when deciding where to work, compared with 58 percent of the workforce as a whole."
However, I do not buy that Millennials 'care' more than previous generations – they just care about different things, a luxury that reflects our current stage of economic development. In other words, previous generations have tackled many of the basic serious problems (with varying degrees of success), which allows subsequent generations to tackle the problems that remain, or those that have arisen as things like new technology is invented. What is interesting and adds another layer of complexity to the manager's job today is the rise of social media. This democratizes public opinion, which makes it easier for firms to interact with their stakeholders but, ultimately, makes it harder to satisfy the variety and multitude of demands.
Take care
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Corporate America Is Taking On Guns and Climate—Issues the Government Won't
By Matthew Campbell and Jackie Simmons
March 1, 2018
Bloomberg Businessweek

Wednesday, March 7, 2018

Strategic CSR - Exxon

Last year, Exxon Mobil's shareholders voted on a motion asking the company to issue a report on its risk exposure to climate change. Although the company was not keen to comply, it has produced a report addressing the issue. The report reaches a very confident, if slightly weird, conclusion:
"Even aggressive climate policies pose 'little risk' to [Exxon's] investments. [The firm] stressed that it expected healthy demand for its products for decades to come, regardless of how strongly countries move to cut emissions. Exxon also played down the impact of electric vehicles on its business prospects."
You can see the full announcement/report here: To say the least, the company's position seems at odds with what the best science (not to mention, common sense) is telling us:
"A paper published in Nature in 2015 estimated that, for the world to have a 50-50 shot at staying below 2 degrees Celsius of warming, the world would have to avoid burning most of the coal reserves currently beneath the ground, half the natural gas, and about one-third of the oil."
Perhaps not surprisingly:
"Exxon laid out a more optimistic view. Oil and natural gas, the company's mainstays, will 'continue to play a critical role in meeting the world's energy demand,' the company said in its report."
Does the company have its head stuck in the sand, or is it confident its lobbyists will prevent any meaningful threat to the status quo?
"Exxon's vast fossil fuel reserves 'face little risk' of being left in the ground, the company said. Less than 5 percent of its reserves would be affected under a 2-degree scenario, the company estimated. Under that scenario, Exxon sees the world's oil consumption dropping only slowly in the next two decades or so, and sees demand for natural gas rising slightly."
A key assumption of the report is that technological innovation will allow the continued burning of fossil fuels:
"Exxon, for instance, has assumed the development of technologies such as carbon capture that would allow the use of fossil fuels to continue with lower emissions."
As we now know, reality is defined by who is shouting the loudest. As such, if Exxon continues to repeat that everything will be OK, perhaps its stakeholders will eventually start to believe it. Or, perhaps not:
"[Exxon did not] detail the risks from the growing number of lawsuits being filed against fossil fuel companies in various states around the United States. In January, New York City sued Exxon, BP, Shell, and other oil companies, demanding billions of dollars in damages to help the city cope with the effects of global warming. 'ExxonMobil's own analysis assumes the world will continue to burn through oil and gas to drive its profits, keeping us on a path toward global temperatures rising well above the 2 degree Celsius threshold,' said Kathy Mulvey, climate accountability manager at the Union of Concerned Scientists."
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Exxon Studies Global Climate Rules and Sees 'Little Risk' to Bottom Line
By Brad Plumer and Hiroko Tabuchi
February 3, 2018
The New York Times
Late Edition – Final

Tuesday, March 6, 2018

Strategic CSR - Facebook

The article in the url below expands the debate about the damaging effects of social media by discussing the pros/cons of scientific progress:
"Seeing science and the tools and connections it provides as a good in itself is profoundly dangerous and wrong."
More specifically, the author relates his critique to the dangers posed by the IT companies that currently dominate our economies:
"Founded by young computer engineers, Facebook, Google and other Silicon Valley companies have been happy to view their powerful inventions as neutral platforms. … These companies have converted an engineer's disregard for real-world outcomes into a libertarian ideology that belittles the harms that stem from their platforms and rejects rules and regulations meant to prevent those harms."
In this light, is the offer of a free internet connection (with strings attached) in the developing world an act of altruism or a step closer to world domination?
"And when India rejected a proposal from Facebook to introduce a free version of internet access that was limited to Facebook and a small assortment of other sites, Mark Zuckerberg, the company's chief executive, responded more in sorrow than anger. 'History tells us that helping people is always a better path then shutting them out,' he explained, gliding past the Indian government's argument that introducing incomplete access to the internet was a worse path."
It seems that times have changed in the Facebook universe:
"… with the announcement last week by Mr. Zuckerberg that the company felt 'a responsibility to make sure our services aren't just fun to use, but also good for people's well-being.' In practical terms, this means that Facebook will be reducing the amount of so-called public content — often provocative posts from businesses and news organizations — in favor of personal content, posts from friends and family."
The interesting question this back-and-forth raises is whether the good intentions of Facebook, combined with the libertarian ideology of free and unlimited online access, helps or hinders society as a whole:
"The public faces the unsatisfying question: Is it better to suffer an engineer's neglect or an engineer's concern?"
One reason for concern is that Facebook has been using data to manipulate its users ever since its inception:
"Since Facebook's earliest days, Mr. Zuckerberg has been fascinated by the power to understand and manipulate users by applying algorithms to the data it collects. … Through this deep knowledge of its users, Mr. Zuckerberg explained, Facebook could determine 'what actually matters to each person on a more granular level.' More than a decade later, Facebook is still using these social-engineering tools to probe its users' psyches. Now, however, the company, which reported $4.7 billion in profits in the third quarter, assures us that these tools will be refashioned to take account of the health of our society."
The trouble is that Facebook's own engineers cannot calculate whether the net effects of social media on society are positive or negative. As the company concluded in a report late last year:
"'When people spend a lot of time passively consuming information — reading but not interacting with people — they report feeling worse afterward," the company said. By contrast, "actively interacting with people — especially sharing messages, posts and comments with close friends and reminiscing about past interactions — is linked to improvements in well-being.'"
Do we trust Mark Zuckerberg this time around?
"Mr. Zuckerberg says Facebook will be steering users to healthier interactions. 'I expect the time people spend on Facebook and some measures of engagement will go down,' he wrote in a post on Facebook. 'But I also expect the time you do spend on Facebook will be more valuable. And if we do the right thing, I believe that will be good for our community and our business over the long term too.'"
For that to be true, we need to trust that Zuckerberg can achieve his goals (without too much collateral damage) and that his determination of 'good' is something we can all agree on. Or, at least, live with:
"Turns out, an enlightened, socially engaged Facebook has a similar outlook as the amoral, audience-seeking Facebook. Each sees connecting online as key to the good life. In other words, don't count on Facebook to disrupt Facebook any time soon."
Take care
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Facebook Doesn't Like What It Sees in the Mirror
By Noam Cohen
January 17, 2018
The New York Times
Late Edition – Final