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

Sunday, September 30, 2018

Strategic CSR - Elizabeth Warren

The article in the url below is by Senator Elizabeth Warren (Democrat, Massachusetts), who announces the legislation she recently introduced aiming to broaden the accountability and transparency of corporations. The reason, she states, is largely reciprocal:

"American corporations exist only because the American people grant them charters. … What do Americans get in return? What are the obligations of corporate citizenship in the U.S.?"
The answer to that question, according to Warren, has clearly evolved:
"As recently as 1981, the Business Roundtable—which represents large U.S. companies—stated that corporations 'have a responsibility, first of all, to make available to the public quality goods and services at fair prices, thereby earning a profit that attracts investment to continue and enhance the enterprise, provide jobs, and build the economy.' … [However] By 1997 the Business Roundtable declared that the 'principal objective of a business enterprise is to generate economic returns to its owners.'"
The result has been a shift in the allocation of resources, toward shareholders and away from other stakeholders:
"In the early 1980s, large American companies sent less than half their earnings to shareholders, spending the rest on their employees and other priorities. But between 2007 and 2016, large American companies dedicated 93% of their earnings to shareholders."
Correcting this, Warren suggests, will help address the more fundamental issue of income inequality in the U.S. Her legislation ("The Accountable Capitalism Act") is designed to do that:
"Corporations with more than $1 billion in annual revenue would be required to get a federal corporate charter. The new charter requires corporate directors to consider the interests of all major corporate stakeholders—not only shareholders—in company decisions."
She claims that this proposal is inspired by the spread of benefit corporations. Some interesting additional aspects of the proposed law:
  • "Employees would elect at least 40% of directors."
  • "At least 75% of directors and shareholders would need to approve before a corporation could make any political expenditures."
  • "… directors and officers would not be allowed to sell company shares within five years of receiving them—or within three years of a company stock buyback."
  • Also, shareholders (meaning anyone who has a single share in the company) "could sue if they believed directors weren't fulfilling those obligations."

So far, so populist. By claiming that "companies shouldn't be accountable only to shareholders," however, Warren perpetuates two key misunderstandings in the CSR debate: First, is a misunderstanding of U.S. corporate law. Firms are, in essence, already not legally required to act in the interests of their shareholders. As Bower & Paine state in their Harvard Business Review article last year, such a claim of shareholder primacy "is flawed in its assumptions, confused as a matter of law, and damaging in practice" (see also the detailed discussion on this issue in Chapter 6 of the 4e).
Second, and more important, however, is that, in reality, firms are already accountable to all stakeholders. The issue in western capitalism is not that firms are not accountable to these stakeholders, but that stakeholders do not enforce the leverage they have over firms. Or, perhaps, they engage in some kind of willful shirking, where they make micro decisions that satisfy their self-interest, but complain at the macro effects of these decisions when they are aggregated. To illustrate – I might shop at Walmart because they have the best quality at the cheapest prices (which is something I might value), but then I might complain when all the Mom & Pop stores close down in my town, without recognizing that the reason they are shutting down is because people like me prefer to shop at Walmart than the Mom & Pop stores.
For capitalism to work as effectively as possible, stakeholders need to hold firms accountable for the behavior they truly want. If we all want to shop at Walmart (or Amazon, or wherever), then that company will quickly dominate the retail landscape. If we want something else, however, then we have to be willing to enforce that, and accept any sacrifice (i.e., higher prices) that might come with that decision. If we do not want to pay the higher prices, then we should stop complaining about the outcomes that are generated from the decisions we make (the value we truly seek).
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Companies Shouldn't Be Accountable Only to Shareholders
By Elizabeth Warren
August 15, 2018
The Wall Street Journal
Late Edition – Final

Friday, September 28, 2018

Strategic CSR - Bitcoin

The article in the url below presents a damning assessment of the future of cryptocurrencies by The Bank for International Settlements. Not only do they represent significant volatility, but are open to fraudulent manipulation and present a grave environmental threat:
"The BIS, an 88-year-old institution in Basel, Switzerland, that serves as a central bank for other central banks, said cryptocurrencies are too unstable, consumer too much electricity, and are subject to too much manipulation and fraud to ever serve as bona fide mediums of exchange in the global economy. It cited the decentralized nature of cryptocurrencies -- Bitcoin and its imitators are created, transacted, and accounted for on a distributed network of computers -- as a fundamental flaw rather than a key strength."
Moreover, the nature of the expansion of cryptocurrencies presents a threat to the internet as a whole:
"In one of its most poignant findings, the BIS analyzed what it would take for the blockchain software underpinning Bitcoin to process the digital retail transactions currently handled by national payment systems. As the size of so many ledgers swell, the researchers found, it would eventually overwhelm everything from individual smartphones to servers. 'The associated communication volumes could bring the Internet to a halt,' the report said."
Most relevant from a CSR perspective, however, is the implications Bitcoin mining has for environmental pollution:
"Researchers also said that the race by so-called Bitcoin miners to be the first to process transactions eats about the same amount of electricity as Switzerland does. 'Put in the simplest terms, the quest for decentralized trust has quickly become an environmental disaster,' they said."
As a result, while Bitcoin has gained growing popularity in some circles, it has been ostracized in others, with some banks treating it on a par with other contentious goods, such as guns (see Strategic CSR – Guns). Criticizing cryptocurrencies, however, is not the same as criticizing the underlying technology (blockchain):
"The BIS did say that blockchain and its so-called distributed ledger technology did provide some benefits for the global financial system. The software can make sending cross-border payments more efficient, for example. And trade finance, the business of exports and imports that still relies on faxes and letters of credit, was indeed ripe for the improvements offered by Blockchain-related programs."
Everything I have read about blockchain suggests it will revolutionize the way we write and enforce contracts, which speaks to the nature of 'trust' in our society.
Have a good weekend
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Bitcoin Could Break the Internet, Central Bank Overseer Says
By Edward Robinson
June 17, 2018
Bloomberg Businessweek

Tuesday, September 25, 2018

Strategic CSR - Domino's Pizza

Years of reading and thinking about business (and CSR) have taught me that it is generally not a good idea for firms to over-estimate their customers. In spite of this, it happens frequently. A good example of this a few years ago was Coca-Cola's campaign to donate a percentage of sales to preserve the polar bear's habitat in the Artic. One problem – customers confused the white (= snow?) can selling regular Coke with the silver Diet Coke can. They also started reporting that the Coke tasted different. Coca-Cola, still traumatized by the New Coke fiasco in the 1980s, immediately withdrew all cans from sale and halted the campaign. The article in the url below reminded of the Coke polar bear incident. This time, Domino's Pizza launched a campaign in Russia promising pizza for life to anyone who had the firm's logo tattooed on their body. As The Wall Street Journal reports, Domino's clearly "underestimated how much Russians love free food."
"Bargains and freebies are powerful draws here. The Soviet period—where foodstuffs were often cheap but in short supply—and the economic hardships of the 1990s have conditioned many Russians to pounce on a good deal. A stagnant economy has left average disposable incomes stuck around $500 a month, and Ms. Koshkina [a customer 'who got a small Domino's logo tattooed above her left kneecap'] said the free pizza would help her put aside a bit of money from her salary working at a piercing and tattoo parlor. 'Who doesn't want free food?' she said."
Originally scheduled to last two months, Domino's suspended the campaign after only a few days as interest soared:
"A spokesman for Domino's Pizza Inc., the U.S.-based owner of the Domino's Pizza brand, said the Russian franchisee had been overwhelmed by the response, receiving more applicants in days than it had expected in months."
Again, the goal should be never to over-estimate your customers:
"Domino's announced the launch of its tattoo promotion—named 'Domino's Forever'—on its page on VKontakte, the Russian equivalent of Facebook , on Aug. 31. The conditions were minimal: Applicants should post a photo on social media of a real tattoo in a visible place with the hashtag #dominosforever. They would receive a certificate allowing them to receive 100 free pizzas a year of any size for 100 years, the company said. Russians hurried to tattoo parlors."
There are several examples of the tattoos in the online version of the article, with Domino's first placing narrower rules for those who qualify and then, after the number of postings piled up, cancelled the campaign altogether:
"Domino's later said 381 people qualified for free pizza in the four days or so that the promotion was running."
The logic driving those who wanted to get tattoos was far from failsafe:
"At his parlor in Moscow, Mr. Gonyshev, 29, said he tried to persuade the students not to add the tattoos, because it wasn't clear they would qualify for the free pizza. He said they replied that the logo was pretty cool and went ahead anyway."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:

Domino's Free Pizza Offer Backfires in Age of Ink
By James Marson and Thomas Grove
September 17, 2018
The Wall Street Journal
Late Edition – Final

Wednesday, September 19, 2018

Strategic CSR - Patagonia

It is difficult not to love Patagonia. While I was walking to work this morning, I saw this sign on the window of our local store:
The article in the url below covers the firm's recent announcement that it will close for election day this year, on November 6. Even though their purpose is clearly partisan ("In the past, Patagonia — known for its advocacy of environmental causes — has encouraged people to vote with the planet in mind"), there is also a larger issue of overall voter registration and participation:
"Four years ago, voter participation hit its lowest since World War II, with only 36 percent of the voting-age population making it to the polls. A 2014 Pew Research Center study found that voters were likely to miss the midterms because they were indifferent about voting, had trouble with the voting process or because of structural forces, like job or school schedules that couldn't budge."
This is not the first time Patagonia has taken this stance and, as before, the firm is encouraging other firms to do the same:
"Patagonia closed stores nationwide on Election Day 2016, as well as its headquarters and distribution and customer-service center, and gave employees paid time off. Patagonia chief executive Rose Marcario wrote that 'this year, we're doing it again,' and that other companies should join in 'because no American should have to choose between a paycheck and fulfilling his or her duty as a citizen.' … In 2016, workers at General Motors, Ford Motor Co., Square, Hearst Publishing, Casper and Thrillist were given a paid holiday, according to CNNMoney."
The firm is known for its radical advocacy:
"Environmental causes have often been a rallying cry for the company, which said it would donate all of its 2016 Black Friday sales — a whopping $10 million — to local environmental groups. The company also gives 1 percent of its annual sales goes to environmental organizations. Patagonia also joined REI, the North Face and other retailers in signing an open letter in 2017 speaking out against the United States' withdrawal from the Paris climate accord under President Trump."
Long may Patagonia's values-based approach to business continue.
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Patagonia is giving its workers Election Day off – and says you should, too
By Rachel Siegel
The Washington Post
July 6, 2018

Monday, September 17, 2018

Strategic CSR - WeWork

The article in the url below covers the decision over the summer by WeWork to exclude meat from its offices. Specifically, the company announced it will no longer pay for any meals that include meat – whether that is catered events in their offices or any reimbursed meal by employees anywhere (inside the office or at a restaurant):
"The company will no longer serve red meat, pork or poultry at company functions, and it will not reimburse employees who want to order a hamburger during a lunch meeting. In a memo to employees announcing the new policy, Miguel McKelvey, WeWork's co-founder and chief culture officer, said the decision was driven largely by concerns for the environment, and, to a lesser extent, animal welfare."
WeWork has grown quickly in recent months and now employs 6,000 employees (aside from the various companies/entrepreneurs that rent its work spaces). As such, as McKelvey noted in the email he sent to employees explaining the decision, the firm can have an impact. What is interesting, however, is that this decision has little to do with animal welfare and everything to do with climate change:
"'New research indicates that avoiding meat is one of the biggest things an individual can do to reduce their personal environmental impact — even more than switching to a hybrid car,' he wrote. Additionally, WeWork could save 'over 15 million animals by 2023 by eliminating meat at our events.'"
Beyond WeWork, however, the article raises a more fundamental point about values in the workplace. Rather than the company reluctantly reflecting the values of its employees who pressure it to adopt this policy or that practice, it is companies that are shaping the behavior (and values) of their employees:
"In ways large and small, companies are imposing corporate values on the personal lives of their employees. Hobby Lobby has refused to pay for birth control for its employees, citing the owner's Christian values. And the chief executives of companies including Koch Industries and Westgate Resorts have sent memos and informational packets to employees suggesting how they vote. Other companies have tried to prevent employees from using everything from Uber to cigarettes. In 2015, IBM banned employees from using ride-sharing apps, citing safety and liability concerns. (Employees rebelled, and the company did a U-turn a day later.) And several big employers, including General Electric, have successfully paid employees to quit smoking. Scotts Miracle-Gro even has a policy of not hiring smokers, a move it says helps keep health care costs down."
Among this growing evangelism, however, "WeWork appears to be the first big company to tell its employees what they can and can't eat." The article suggests that removing choice is difficult for a company to do. Far more effective is to maintain at least the illusion of choice through the power of nudges:
"… at Google, two of the many cafes at company headquarters tried out 'meatless Mondays,' going vegetarian for just one day a week. Employees rebelled, throwing away silverware and staging a protest barbecue. Meatless Mondays didn't last at Google. But in time, the company made changes to the cafeterias — like offering smaller plates and making salad bars more prominent — that improved employees' eating habits."
For McKelvey, however, this is an issue larger than diet and larger than any one person:
"At WeWork, a company led by idealistic co-founders who got their start with an eco-friendly co-working space in Brooklyn, the move to vegetarianism is a reflection of their unconventional personalities. 'I don't eat meat, but I don't consider myself a vegetarian,' Mr. McKelvey said. 'I consider myself to be a 'reducetarian.' I try to consume less and be aware of the decisions I'm making. Not just food, but single-use plastics, and fossil fuels and energy.'"

More than an imposition on his employees that he needs to apologize for, therefore, McKelvey sees it as his duty to influence their lives:
"As Mr. McKelvey sees it, imposing his values on his employees is a natural part of being a corporate leader today. 'Companies have greater responsibility to their team members and to the world these days,' he said. 'We're the ones with the power. Large employers are the ones that can move the needle on issues.'"
As such, it seems that there is more to come:
"Uncomfortable as the new dietary policy may be, Mr. McKelvey said WeWork is only just getting started. The company is phasing out leather furniture, single-use plastics and is going carbon neutral. In time, he said, the company will evaluate its consumption of seafood, eggs, dairy and alcohol."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Memo from the Boss: Meat is not an Option
By David Gelles
July 22, 2018
The New York Times
Late Edition – Final

Thursday, September 13, 2018

Strategic CSR - Facebook

The article in the url below reveals the fascinating extent of Facebook's plans to better understand our online behavior:
"Facebook has filed thousands of patent applications since it went public in 2012. One of them describes using forward-facing cameras to analyze your expressions and detect whether you're bored or surprised by what you see on your feed. Another contemplates using your phone's microphone to determine which TV show you're watching. Others imagine systems to guess whether you're getting married soon, predict your socioeconomic status and track how much you're sleeping."
The goal is to record, and therefore understand, every aspect of our online lives – from our political voting preferences, to our sexual orientation, to our marital and employment status, to our deep-seated biases and prejudices. Of course, Facebook would say the purpose of these ideas is to build a better product that more effectively meets our needs. Critics, of course, point out that it really allows Facebook to sell more useful information that advertisers can use to target us:
"In the first quarter of 2018, almost 99 percent of Facebook's revenue came from advertising."
And this ignores the argument that more tailored news and information the reinforces pre-existing beliefs and biases is exactly what we do not need as a society at the moment. The article features "seven Facebook patent applications that show how the company has contemplated gathering and exploiting your personal information." Here is one example of a patent that identifies small flaws in your camera lens to connect friends and acquaintances:
"[One patent] considers analyzing pictures to create a unique camera 'signature' using faulty pixels or lens scratches. That signature could be used to figure out that you know someone who uploads pictures taken on your device, even if you weren't previously connected. Or it might be used to guess the 'affinity' between you and a friend based on how frequently you use the same camera."
Why does this matter?
"… with more than two billion monthly active users, most of whom share their thoughts and feelings on the platform, Facebook is amassing our personal details on an unprecedented scale."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Your Life, Patented by Facebook
By Sahil Chinoy
June 24, 2018
The New York Times
Late Edition – Final

Tuesday, September 11, 2018

Strategic CSR - Walmart

The article in the url below caught my eye:
"Walmart announced plans on Wednesday to offer subsidized college tuition for its 1.4 million workers in the United States, joining a growing list of companies that are helping employees pay for higher education as a perk in a tight labor market."
"The giant retailer will pay tuition for its workers to enroll in college courses — online or on campus — to earn degrees in either supply chain management or business, company officials announced at Walmart's annual shareholder meeting in Bentonville, Ark."
What with the ever-increasing competition provided by Amazon and the low levels of unemployment in the U.S., Walmart is finding that it has to become a better employer in order to attract and retain the quality of employee that it needs to run its stores/operations. Interestingly, the company is extending the support to both full and part-time workers, and seems to be genuine in wanting their employees to become better qualified:
"Full- and part-time Walmart workers can use the subsidy to take courses at the University of Florida; Brandman University in Irvine, Calif.; and Bellevue University in Bellevue, Neb. The three universities were chosen because of their high graduation rates, particularly among part-time students, and their experience with those already in the work force, Walmart executives said. The employees will not be obligated to continue working for Walmart after they get their degrees, and must put up only $1 a day toward the cost of classes."
In other words, Walmart has to create more value for one of its key stakeholders, its employees, otherwise they will go elsewhere. As such, Walmart is following the footsteps of some good companies:
"Walmart, the country's largest employer, introduced the tuition subsidy as it seeks ways to retain workers at a time of low unemployment. Employers like Starbucks and Amazon also offer tuition support."
Walmart has also learned from the prior announcements by these companies:
"Walmart said its goal was to help employees obtain a college degree without having to take out loans. Walmart workers enrolled in the program would not be required to pay for their education upfront and seek reimbursement later. When Starbucks first announced its tuition subsidy and a partnership with Arizona State University in 2014, the company was criticized for pushing the risk onto its workers by making them pay up front."
The flip side of this, of course, is that if the employees stick with Walmart, even at the relatively low pay offered, it means they believe that the firm is offering more value for them than an alternative employer. This is the key lesson that economics teaches us – assuming a voluntary relationship, when employer and employee come together at an agreed compensation package and benefits, then value is being created on both sides:
"Walmart workers will qualify for the benefit after 90 days of employment and will not be penalized if they leave the company before finishing their studies."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Walmart to Subsidize Cost of College Tuition for its U.S. Workers
By Michael Corkery
May 31, 2018
The New York Times
Late Edition – Final

Tuesday, September 4, 2018

Strategic CSR - Recycling

The article in the url below lays out in detail the deteriorating situation in the recycling industry:
"Prices for scrap paper and plastic have collapsed, leading local officials across the [U.S.] to charge residents more to collect recyclables and send some to landfills. Used newspapers, cardboard boxes and plastic bottles are piling up at plants that can't make a profit processing them for export or domestic markets."
The extent of the problem is illustrated in the chart accompanying the story, which shows the dramatically decreasing average prices for recycled "old cardboard" and "mixed paper" since the beginning of 2017:
This situation has arisen due largely to two driving forces: First, ironically, is the rising popularity of recycling. As cities and counties have moved to expand their recycling in an effort to reduce the amount of waste being redirected to landfills, the quality of that recycling material has decreased. That is, the waste has become 'contaminated':
"U.S. recycling programs took off in the 1990s as calls to bury less trash in landfills coincided with China's demand for materials such as corrugated cardboard to feed its economic boom. Shipping lines eagerly filled containers that had brought manufactured goods to the U.S. with paper, scrap metal and plastic bottles for the return trip to China. As cities aggressively expanded recycling programs to keep more discarded household items out of landfills, the purity of U.S. scrap deteriorated as more trash infiltrated the recyclables. Discarded food, liquid-soaked paper and other contaminants recently accounted for as much as 20% of the material shipped to China, according to Waste Management Inc.'s estimates, double from five years ago."
Second, and more dramatically, is the action taken by the Chinese government at the start of 2018 to limit the amount of recycling waste being imported into their country:
"The tedious and sometimes dangerous work of separating out that detritus at processing plants in China prompted officials there to slash the contaminants limit this year to 0.5%. … The changes have effectively cut off exports from the U.S., the world's largest generator of scrap paper and plastic."
The extent of the impact of this decision is illustrated by the second chart accompanying the article, which shows the large percentage of all exported waste that was previously exported to China:
The combined effect of these two drivers is to place recycling in the U.S. in grave danger. We have to rethink our approach to recycling on a community-wide basis or the incentives to recycle our waste will gradually disappear:
"The waste-management authority in Lancaster County this spring more than doubled the charge per ton that residential trash collectors must pay to deposit recyclables at its transfer station, starting June 1. … The additional transfer-station proceeds will help offset a $40-a-ton fee that the authority will start paying this summer to a company to process the county's recyclables. Before China raised its quality standards at the beginning of this year, that company was paying Lancaster County $4 for every ton of recyclables."
The economics of the present system simply no longer make any sense:
"China stopped taking shipments of U.S. mixed paper and mixed plastic in January. … mixed-paper shipments to other Asian countries now fetch $5 a ton, down from as much as $150 last year. Other buyers such as Vietnam and India have been flooded with scrap paper and plastic that would have been sold to China in years past. … Sacramento County, which collects trash and recyclables from 151,000 homes, used to earn $1.2 million a year selling the scrap to Waste Management and another processor from scrap. Now, the county is paying what will amount to about $1 million a year, or roughly $35 a ton, to defray the processors' costs."
Ultimately, at a minimum, we are going to have to separate our recycling before it is picked-up (as the citizens of many European countries already do), with recyclers refusing to pick-up waste that is not pre-separated or cities/counties fining residents for failing to do so:
"Some recyclers said residents and municipalities need to give up the "single-stream" approach of lumping used paper and cardboard together with glass, cans and plastic in one collection truck. … Collecting paper separately would make curbside recycling service more expensive but cut down on contamination."
Take care
Instructor Teaching and Student Study Site:
Strategic CSR Simulation:
The library of CSR Newsletters are archived at:
Recycling Firms Hit by Crushing Economics
By Bob Tita
May 12, 2018
The Wall Street Journal
Late Edition – Final