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

Thursday, April 26, 2018

Strategic CSR - Environmentalism

In celebration of Earth Day this past Sunday, the article in the url below summarizes the history of the environmental movement's evolving relationship with business:
"Now widely known as Third Wave environmentalism, the idea first became a reality in 1990, when McDonald's teamed up with my organization, the Environmental Defense Fund, to reduce more than 300 million pounds of solid waste by doing away with its foam-clamshell packaging. The Third Wave built on the progress of the first two: Teddy Roosevelt-era land conservation, followed by mid-20th-century antipollution laws like the Clean Air Act."
The article then goes beyond that to argue that this relationship has entered a new phase of much closer co-operation/co-ordination:
"Market-based approaches and corporate partnerships are standard practice today. Yet too many environmentalists still regard business as the enemy, and vice versa. That may finally be changing, because an emerging wave of environmental innovation is making these partnerships more productive, and their results more precisely measurable. Call it the Fourth Wave of environmental progress: Innovation that gives people new ways to solve environmental problems."
For example:
"Last year, … Smithfield Foods, the world's largest pork producer, joined with EDF and other groups to reduce fertilizer waste on the vast network of farms from which it purchases roughly two million tons of corn each year. The move is part of Smithfield's goal of cutting supply-chain greenhouse-gas emissions 25% by 2025. The company is the first in its industry to set such a target, and its progress is enabled by corn growers' increasing investment in tools that help determine the most efficient ways to apply fertilizer."
This line of argument is perhaps all the more surprising (and welcome) because it is written by the current president of the Environmental Defense Fund. He argues that the fourth wave of environmentalism is substantively different to each of the three preceding waves, principally in terms of the complexity of the co-operation between business and environmental activists:
"Where Third Wave partnerships tended to be one-on-one, the Fourth Wave boasts many multilateral partnerships. EDF's work to measure methane emissions from the oil-and-gas supply chain involved scores of academic institutions and energy companies, and now we're working with the Netherlands Institute for Space Research to derive emissions data from the European Space Agency's Sentinel-5P satellite, sent into orbit last year. More than 400 companies have joined Walmart in its effort to reduce greenhouse-gas emissions in its global supply chain by one billion tons—more than the total annual emissions of Germany."
The key seems to be to leverage evolving technology:
"In any era, those doing the hard work of solving environmental problems take advantage of the best available tools, and in this era those tools include innovations that can help drive transparency, responsibility and low-cost solutions. Technology can obviously be used for good or ill. But when sensors, machine learning and data analytics are used to shape smart policy, rein in free riders, and reward corporate responsibility, they will enable changes that help people and nature prosper."
Perhaps, but I would think the more difficult transition is mental. The shift from seeing business as the 'enemy' to seeing it as an essential part of the solution is transformational. It is hard for activists committed to an ideologically pure vision of the environment to shift to accepting that some pollution is an inevitable cost to economic and social progress.

Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Fourth Wave Environmentalism Fully Embraces Business
By Fred Krupp
March 21, 2018
The Wall Street Journal
Late Edition – Final

Tuesday, April 24, 2018

Strategic CSR - Human psychology

The article in the url below presents a fascinating, counter-intuitive perspective on the SRI industry:
"An analysis of fund inflows into U.S. stock ETFs and mutual funds that invest with a social, governance or environmental purpose (often called sustainable, ESG or impact funds) paints an interesting picture of investor psychology. Namely, while most traditional investors run for the hills when news comes out that conflicts with their expectations or ideas about the world, sustainable investors appear to dedicate more of their money to the cause when news or policy decisions that go against their values are announced."
The empirical support for this conclusion is fascinating:
"In perhaps the clearest representation of this, during December 2016, one month after the election of Donald Trump, a staggering $2.1 billion flowed into U.S. equity sustainable funds—representing a 3.5% increase in the category's total assets under management as of Nov. 1."
How exceptional was this "Trump bump"?
"The 'Trump bump' (which was the largest single monthly increase into the sustainable-investing class ever) was 170% larger than the next-largest one-month inflow. And the growth has continued. Since the election, $8.1 billion has flowed into these funds, a 13.1% jump from the assets under management on the eve of the 2016 presidential election—by far the greatest percentage inflow into any class or style of fund (e.g., value, growth, small-cap funds) since the election."
The authors extended their investigation, also looking at flows into environmental funds following the passing of COP 21 in Paris and, later, the announcement by the U.S. that it was withdrawing from the pact:
"In the month following the Paris Climate Agreement (which was signed in December 2015), $50.1 million flowed out of environmental-focused funds (amounting to a 1.05% drop in assets under management from the previous month). Conversely, when President Trump withdrew the U.S. from the climate agreement in June 2017, $98.5 million flowed into them (a 1.32% increase in assets under management)."
Similarly, the #MeToo movement appears to have influenced money flows into and out of social funds that employ gender or diversity filters:
"Surrounding the accusations of sexual abuse that came to light around Hollywood's Harvey Weinstein, Kevin Spacey and other celebrities, iShares MSCI KLD 400 Social ETF (DSI)—the largest socially conscious ETF—saw inflows of $48 million during November 2017. This was the fund's single largest monthly inflow, pushing it close to the $1 billion mark in assets. And, it isn't just individual investors who seem to be moving their money. In the four months following the news about Mr. Weinstein, TIAA-CREF Social Choice Equity Fund institutional class (TISCX) jumped $211 million (starting from $1.9 billion)—a striking 11% inflow."
People are both fascinating and frustrating, which at least keeps all of us social scientists in a job!
"Many factors are driving the increasing popularity of sustainable investing, including demographic demand (high among millennials and women), generational wealth transfer, a strong market and new sustainable financial products. But macro political and cultural trends are clearly the largest drivers—specifically, negative news that conflicts with sustainable investors' views of the world. Asset managers and wealth advisers should take note: Politics is personal, especially when it comes to investing."
This study reminds me of patterns around gun sales – when Obama (a proponent of gun reform) was elected, gun sales spiked (due to a fear that he wanted to remove guns from society by making them illegal), while sales dropped after the election of Trump (a Second Amendment supporter), leading to the bankruptcy of the 200-year-old gun-maker Remington in March. It also reminded me of subscriptions to The New York Times or viewership of CNN, which jumped the more that these media institutions have come under attack for their supposedly biased reporting.
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Ethical Investing Seems to Thrive on 'Bad' News
By Derek Horstmeyer
April 9, 2018
The Wall Street Journal
Late Edition – Final

Thursday, April 19, 2018

Strategic CSR - Carbon emissions

The article in the url below demonstrates how far we have to go before we can even begin to think about achieving sustainability. In spite of all the warning signals, we refuse to even begin taking the steps necessary to preserve the planet:
"For now, however, we're still moving in the opposite direction: Carbon dioxide emissions from the use of coal, oil and natural gas increased 1.4 percent globally in 2017 after holding steady for the previous three years, the International Energy Agency reported on Thursday. That's the equivalent of adding 170 million new cars to the road worldwide."
In particular, there are five drivers of increased carbon emissions identified by the article, each of which would be difficult to surmount (given human nature and the rapidly expanding middle class worldwide); together, they represent a formidable challenge. First, is the growth in Asia:
"Roughly two-thirds of last year's emissions increase came from Asia, where fast-growing countries like China, India and Indonesia continue to rely heavily on fossil fuels as they lift themselves out of poverty."
Second, is the insufficient growth of renewable energy:
"Last year's 'unprecedented' growth in renewables, the I.E.A. said, satisfied only about one-quarter of the increase in global energy demand as the world's economy boomed. Fossil fuels supplied the rest."
Third, is the resilience of coal:
"… coal use rebounded slightly in 2017, rising by 1 percent, driven in part by an increase in coal-fired power in Southeast Asia. A particularly hot summer in China also led the country to run its existing coal plants more often to power air conditioning."
Fourth, is growing affluence and the purchases we make that reflect it, in particular cars:
"Demand for oil rose 1.6 percent last year, much faster than the average annual pace over the previous decade. As oil prices have declined, more people in the United States and Europe are buying larger S.U.V.s, pushing up transportation emissions further."
Fifth, is the insufficient gains in energy efficiency:
"In 2017, the energy intensity of the global economy — a measure of efficiency — improved by just 1.7 percent, a slower pace than in each of the previous three years. The agency noted that many countries appear to be easing up on government policies to improve energy efficiency."
A second article on the same day and the same page of The New York Times reminds us that carbon is only one of the many toxic materials we pump into the environment at an unsustainable rate:
"In the Pacific Ocean between California and Hawaii, hundreds of miles from any major city, plastic bottles, children's toys, broken electronics, abandoned fishing nets and millions more fragments of debris are floating in the water — at least 87,000 tons' worth, researchers said. …  [The so-called garbage patch] is four to 16 times bigger than previously thought, occupying an area roughly four times the size of California and comprising an estimated 1.8 trillion pieces of rubbish."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Behind the Increase in Gas Emissions Last Year
By Brad Plumer
March 23, 2018
The New York Times
Late Edition – Final

Tuesday, April 17, 2018

Strategic CSR - Carbon pricing

This week's Newsletters will focus on our consumption of carbon, either directly (via emission levels) or indirectly (via market pricing). To begin, the article in the url below discusses the range of efforts being implemented to tackle climate change in the way recommended by most economists – to price carbon emissions. At some level, this is gaining traction among some governments that are finally beginning to take climate change policy seriously:
"A total of 41 OECD and G20 governments have announced either a carbon tax or a cap-and-trade scheme, or both. Add state and local schemes, and they cover 15% of the world's emissions, up from 4% in 2010."
While impressive on the surface, such schemes (cap-and-trade, in particular) are not comprehensively exposed to market forces and, as such, are subject to distorting political influences. Seeing the day when carbon taxes are coming, however, companies are not waiting to be told what to do:
"Companies are moving faster than many governments on carbon pricing. Nearly 1,400 firms globally with combined revenues of $7trn already use, or soon will, 'internal carbon prices.'"
This is happening at a pace that is not widely recognized:
"Of the 6,100-odd firms which report climate-related data to CDP, a British watchdog, 607 now claim to use 'internal carbon prices.' The number has quadrupled since CDP first began posing the query in its annual questionnaire three years ago. Another 782 companies say they will introduce similar measures within two years. Total annual revenues of these 1,389 carbon-price champions amount to a hefty $7trn. Most come from rich countries, but more developing-world firms are joining them."
In most cases, firms charge departments internally for the amount of carbon they use (whether in production or executives flying to meetings overseas), with the goal of reducing the firm-level total. Microsoft and Disney are both mentioned in the article as early adopters. Shell is also a proponent:
"In his day job as chief executive of Royal DSM, Mr Sijbesma has made the Dutch food producer examine all proposed ventures to check whether the sums still add up if a ton of carbon dioxide cost €50 ($60), well above the going rate of €6 or so in the European Union's emissions-trading system, which is kept low by an oversupply of permits. Where they do not, alternative feedstocks or cleaner energy suppliers must be found. If a project still looks unprofitable, it could be discarded altogether."
What I found interesting in the article, however, is the extent to which firms are differentiating between the short and long term in their planning:
"Besides assessing capital projects at €30 per ton of carbon dioxide, Saint-Gobain, a French maker of building materials, factors in a higher price of €100 per ton when choosing between long-term research-and-development projects. AkzoNobel, a Dutch chemicals giant, uses €50 per ton for most investments, but double that for those with lifetimes of 30 years or more."
Needless to say, implementation is inconsistent across firms. Nevertheless, the fact that so many firms are innovating in this area suggests there is support for governments to introduce a carbon tax, which immediately exposes all carbon-pricing schemes to market forces and all firms to the full costs of production. When (not if) this happens, those firms that are being the most creative and experimental today will see the largest and quickest benefit.
"Such voluntary steps will not stop the planet sizzling. But they help firms prepare for when governments do bring in pricing schemes. In December China launched a market for trading carbon emissions which is the world's largest. The clearest sign of progress would be for similar policies elsewhere to render internal exercises redundant."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Low-carb diet
January 13, 2018
The Economist

Thursday, April 12, 2018

Strategic CSR - Shareholder democracy

If the fiction of shareholder democracy needed any more exposure, the article in the url below highlights the weak powers that shareholders have to influence directly the running of corporations. In particular, the article focuses on what it terms "zombie directors":
"They're board members who've failed to get a majority of shareholder votes in elections but continue to serve. From 2012 to 2016 there were a total of 225 instances where directors of public companies got less than half the votes cast, but only 44 directors, or 20 percent, left within the next election cycle, according to a Bloomberg analysis of data from ISS Corporate Solutions Inc. The directors who stayed included 30 who were snubbed by shareholders more than once."
In contrast to many shareholder votes, where the results are nonbinding on management, director elections are binding. Rather than a majority needed to be elected, however, most firms allow directors to be elected with a plurality of votes. This means merely that they need more votes than any other candidate and, since most directors run unopposed, 1 vote is all they need to be duly elected:
"In response to investor and activist complaints, companies have been agreeing to new standards under which directors who don't receive a majority of votes have to submit a letter of resignation. Currently, 54 percent of companies require a director to do so. The hitch: The board usually isn't required to accept those resignations and can reinstate the unelected director."
The article lists a number of such examples, with some directors failing to receive a majority of votes multiple times:
"In each case, the directors reviewed the voting results and chose not to accept the resignations, citing their colleagues' value to the company, according to regulatory filings."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
With 'Zombie' Directors, It's the Board of the Living Dead
By Jeff Green and Alicia Ritcey
August 10, 2017
Bloomberg Businessweek

Tuesday, April 10, 2018

Strategic CSR - A 'professional'

The article in the url below was written by Frank Abrams for HBR in 1951. At the time, Abrams was 'chairman' of Standard Oil of New Jersey (which later became Exxon). I learned two things about this article from the late, great Bill Frederick. First, that this article (and not the better-known 1953 book by Howard Bowen, Social Responsibilities of the Businessman) represented the beginning of the CSR movement in the U.S.; and, second, that the article was actually ghost-authored by Courtney Brown when she was Dean of the Business School at Columbia University – Brown had previously worked for Abrams at Standard Oil.
I assign this article for my students in the first class of my strategic management course. I do so because Abrams' main point is that, in 1951, the job of being a manager was about to become a profession (and, by implication, the MBA was the vehicle by which this was to occur):
"Briefly, it seems to me that business management in the United States is acquiring more and more the characteristics of a profession."
As I point out to my students, however, today, we are further from that point than we were in 1951. This is clear when you consider the three main characteristics that define what it means to be a professional:
  1. A sense of duty beyond the self.
  2. A certified body of knowledge (governed by an accreditation organization).
  3. A code of ethics.
By these criteria, clearly, a manager is not a professional, even though most business schools label their MBA programs things like the 'professional program.' Nevertheless, it is worth emphasizing what might have been. What strikes me in particular about the article is Abram's vision of the high sense of duty that a manager has to society:
"There is no higher responsibility, there is no higher duty, of professional management than to gain the respect of the general public through objective participation in, and consideration of, national questions, even though these questions in many cases do not relate directly to their immediate business problems."
In fact, Abrams refers to the work of a manager as something closer to a patriotic duty:
"There is an underlying patriotic motive in all of this which an intelligent management thoroughly understands. In a democratic state, only those institutions which so conduct themselves as to deserve, secure, and hold public confidence can survive and prosper. It is a plain ordinary fact that our country, to be strong and constructive in a troubled world, is dependent upon free, competitive institutions to give its people opportunity of self-expression and advancement. If we are to be helpful in advancing our American way of life, we must be willing to show by example that individual objectives can best be served when they are identified with the common good."
The reason that society confers professional status on a particular job is, essentially, for protection. For example, there is a reason why society does not let me open a hospital and start operating on people (like a medical doctor), because they would die if I did. That is the same reason why society does not let me design and build buildings (like an architect), because those structures would fall down. In other words, in order to protect against the potential harm that can be caused by poorly-trained people doing those essential jobs (even if they are confident that they can), society sets very high standards (a form of quality assurance) to minimize the risks. In return for the strict requirements demanded in order to become a professional, society grants a monopoly to that group to practice that particular job (and reap the rewards for doing so).
What is important about this is that there is no such requirements to start up a business and call yourself a manager. Society has decided that it is willing to make the trade-off between risk and reward for business. If you have an idea and think it will be successful in the marketplace, you can form a company and try it out with very few barriers in your way. Of course, if you fail, the business can cause harm, but society is willing to take that risk in the hope of fostering the next Google, or Amazon, or Apple, or whatever the next life-changing company will be.
That is why managers are not professionals and the MBA is not the certified gateway to becoming a manager that it could have been. I'm not saying we would have been better off if the manager was a true professional, but I like to teach this to students to open their eyes about the risks/rewards of business, as well as the lack of understanding in most business schools about what it means to be a true professional. I also like to emphasize the business school's role in failing to create the conditions necessary to bring this about. Having said that, I make the point that, just because management is not a profession does not mean that they, as MBA graduates, cannot carry themselves as a professional by adopting the characteristics of a professional. To this end, the MBA Oath (, see also Strategic CSR – MBA Oath) initiated by Harvard MBAs for graduating students, is a good start.
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Management's Responsibilities in a Complex World
By Frank W. Abrams
May, 1951
Harvard Business Review
Vol. 29, No. 3

Friday, April 6, 2018

Strategic CSR - Stakeholder expectations

The article in the url below contains some interesting statistics on the extent to which businesses are internalizing and responding to evolving societal concerns:
"On politics, business leaders are risk-averse. They prioritize stability and the status quo. What has changed is the definition of the status quo. Gay and transgender rights, and action on climate change, were once liberal causes. They are now largely mainstream, particularly in big cities that are home to corporate head offices and the educated workers they covet. Businesses have adapted their own plans, policies and attitudes to this new mainstream."
As society evolves, companies need to evolve with them. Those companies that evolve most effectively (a combination of speed and content) will be more successful:
"This changes [CEOs'] cost-benefit calculus: Speak up and embroil yourself in unwelcome controversy, or stay silent and invite the opprobrium of customers, employees, social media and, for some, their own families and consciences. Increasingly, they have concluded that inaction is the riskier path."
What does this shift look like in terms of concrete policies and practices?
"Half of Fortune 500 companies provide transgender inclusive health benefits—up from none in 2002—and 61% offer domestic-partner benefits to gay couples, according to the Human Rights Campaign. … Similarly, nearly half the Fortune 500 has some sort of internal target for greenhouse-gas emissions, renewable energy or efficiency, according to the Carbon Disclosure Project."
Firms reflect the collective set of values held by key stakeholders. As such, they will do what their stakeholders hold them accountable for. To continue down this path, therefore, stakeholders need to be sure to reward those companies that match the values they want to see businesses adopt and punish those firms that transgress those values.
Have a good weekend
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
For Business, a New Political Status Quo
By Greg Ip
August 17, 2017
The Wall Street Journal
Late Edition – Final

Tuesday, April 3, 2018

Strategic CSR - Business schools

Over the winter break, I started reading the book From Higher Aims to Hired Hands by Rakesh Khurana. The main message is that business schools have not lived up to the intentions behind their creation. That, rather than build a platform to train managers as professionals (in the true meaning of that term), they have instead morphed into money machines for universities, where revenue generation trumps their educational mission. This message was reinforced by the article in the url below, which is a review of the book The Golden Passport published last year by Duff McDonald. The critique offered by the book (and summarized in the review) is damning:
"Anthropologists in the distant future will make their careers investigating the extraordinary rituals of American business education. As they sift through the wreckage of a civilization that bestowed its highest rewards on individuals trained to ignore its deepest problems, they will be lucky to have as their guidebook Duff McDonald's deliciously iconoclastic history of the Harvard Business School, 'The Golden Passport.'"
The overall message is that business schools have played a large part in producing the managers who have shaped the economy into something that serves the interests of the minority at the expense of the majority. Although HBS is not the only problem, the institution is singled out for particular disdain. Michael Jensen earns particular criticism for his role in propagating the diffusion of agency theory throughout business schools. Michael Porter is also heavily criticized for creating a problem that he then magnanimously offered to help solve (for a price, of course):
"The Monitor Group, the consulting company Mr. porter co-founded, raked in over $100 million from AT&T in the early 1990s—just as the old phone company, flailing around in search of new sources of monopolistic advantage, launched a series of strategic acquisitions that landed it in a ditch. Starting in 2006, Monitor put its expertise in the service of a certain terrorist-sponsoring dictator in Libya. … The strategic foray into the tin-pot sector—which included contracts with the Assads in Syria, as well as the Russians and Saudis—did not keep the consulting firm from bankruptcy. Now, according to the author, Mr. Porter seems convinced his management magic will solve the problems of health care and education. Apparently all we need to get our schools and insurance companies back on track is a little 'strategy.'"
While the critique is good, there is not much offered by the book in terms of possible alternatives. The absence in the review of plausible ways forward is palpable. This applies to the general direction of business school education. I agree with the criticism, but haven't seen an accurate description of why previous models were 'wrong' (e.g., shareholders do not own the firm), or what should be taught in its place (e.g., sustainable value creation). In other words, the discussion around the book (and I read several reviews of it) is not very enlightening and further entrenches an 'unhelpful' view of the role of the firm in society.
I think the principles advocated in Strategic CSR are an important part of that discussion. Complementing these ideas is the work that all of you are doing in your classrooms every day to build a 'better' alternative. How to get HBS (or any other influential actor) to pay attention, though? That is the essential question.
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Schools of Mismanagement
By Matthew Stewart
April 22-23, 2017
The Wall Street Journal
Late Edition – Final