The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

To sign-up to receive the CSR Newsletters regularly during the fall and spring academic semesters, e-mail author David Chandler at david.chandler@ucdenver.edu


Monday, October 29, 2018

Strategic CSR - Censorship

It is difficult to think of life without Google, Facebook, or Twitter (for good or bad). In China, however, these everyday companies are virtually unknown:
 
"A generation of Chinese is coming of age with an internet that is distinctively different from the rest of the web. Over the past decade, China has blocked Google, Facebook, Twitter and Instagram, as well as thousands of other foreign websites, including The New York Times and Chinese Wikipedia."
 
The key is censorship. The government wants to control the information that its citizens are exposed to, so will not permit companies that don't provide such access. Hence, the rise of Chinese companies that provide the same purpose as Google (Baidu), WhatsApp (WeChat), and Twitter (Weibo) in the West. While we might call them imitations or alternatives, in China they are all the current young generation know:
 
"Now the implications of growing up with this different internet system are starting to play out. Many young people in China have little idea what Google, Twitter or Facebook are, creating a gulf with the rest of the world. And, accustomed to the homegrown apps and online services, many appear uninterested in knowing what has been censored online, allowing Beijing to build an alternative value system that competes with Western liberal democracy."
 
Given the pace of innovation and growth of online companies, the government needs to work hard to keep up:
 
"In the first half of this year, the internet regulator Cyber Administration of China said it had shut down or revoked the licenses of more than 3,000 websites."
 
This is not only an attempt to control society's values, however, but is also a form of economic protectionism. Without competition from the massive Western companies, the Chinese equivalents have grown strong and, as the article reports, the government is now looking to export their success:
 
"These trends are set to spread. China is now exporting its model of a censored internet to other countries, including Vietnam, Tanzania and Ethiopia."
 
The danger, of course, given the size and value of the Chinese market is that the Western companies will be more than willing to compromise to gain access:
 
"Google has been working on a censored search engine for China's smartphone users in case the government lets it in. And last month, Facebook gained approval to open a subsidiary in the eastern province of Zhejiang — only to see the approval quickly withdrawn."
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


A Very Different Internet Under Beijing's Control
By Li Yuan
August 7, 2018
The New York Times
Late Edition – Final
B1
 

Friday, October 26, 2018

Strategic CSR - Happiness

The article in the url below discusses the relationship between wealth and happiness:
 
"In America (and also in other countries), an impressive postwar rise in material well-being has had zero effect on personal well-being. The divergence between economic growth and subjective satisfaction began decades ago. Real per capita income has more than tripled since the late 1950s, but the percentage of people saying they are very happy has, if anything, slightly declined."
 
The reasons for this, the article argues, are twofold. First, happiness depends on your day-to-day context:
 
"According to World Bank data, the share of the world's population living on less than $1.90 a day (inflation adjusted) declined to under 10 percent in 2015 from 44 percent in 1980, an astounding achievement. But ordinary people's well-being depends mainly on their immediate surroundings."
 
In other words, if you are a coalminer in West Virginia, or a steel worker in Pennsylvania, or an automaker in Michigan, you may be less enthralled with the rise in living standards of workers overseas when it has been at your own expense. It matters more that you are absolutely worse off than you were previously. The second reason is that happiness depends on how you are faring relative to others:
 
"Although moral philosophers may wish Homo sapiens were wired more rationally, we humans are walking, talking status meters, constantly judging our worth and social standing by comparing ourselves with others today and with our own prior selves."
 
In other words, even if you are doing better than you were ten years ago, that is little consolation if those around you are doing much better than you are. The only exception to that is if individuals see potential in their own future to rise:
 
"Absolute standing is not irrelevant, and people will tolerate and sometimes even embrace inequality if they believe the system is fair and lets them get ahead. Still, the witticism (frequently attributed to Gore Vidal) that 'it is not enough for me to succeed; others must fail' is uncomfortably accurate."
 
The human element of all this is that we are not very good at being content with our own situation and are quick to evaluate our progress in terms of relative perception, rather than objective reality:
 
"Inequality, in short, is immiserating. One could cite more evidence in the same vein. Places in the United States with more inequality have higher stress and worry, more political polarization and lower social connectedness, even among the wealthy. Moreover, what counts for subjective well-being is not just reality but also perception. If social media and reality TV disproportionately depict millionaires and amazing homes, or if talk-radio pundits insist that government takes from hard-working whites to subsidize lazy minorities, resentment grows, never mind what the statistics may say."
 
The author discusses these attributes of happiness in the context of rising nationalism across countries, today. It could just as easily explain the headwinds facing the development of a more sustainable economic system.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/ 
 
 
More Wealth Has Not Made Us Happier
By Jonathan Rauch
August 22, 2018
The New York Times
Late Edition – Final
A19
 

Tuesday, October 23, 2018

Strategic CSR - Burberry

The article in the url below shines some light on a practice in the fashion industry that I was not aware of:
 
"Every winter the Tuscan workshops of Stefano Ricci, a high-end menswear label, box up the year's unsold products—from cashmere suits and silk ties to finely woven cotton shirts—and send them off on trucks to be burned."
 
I thought unsold items were shipped off to discount outlets although, now it is pointed out to me, it makes sense to burn the clothes (from a business perspective). In fact, there seem to be two main reasons for doing this:
 
"Destroying unsold inventory is a widely used but rarely discussed technique that luxury companies perform to maintain the scarcity of their goods and the exclusivity of their brands. In Italy and many other countries, they can also claim a tax credit for destroying the inventory."
 
This became a story, however, because Burberry decided to change its policy:
 
"On Thursday, British fashion label Burberry Group PLC thrust the technique into the spotlight by announcing it would immediately stop destroying unsold stock, bowing to pressure from environmental groups who say it is wasteful. The amount of stock Burberry destroys had risen sharply in recent years, from £5.5 million in fiscal year 2013 to £28.6 million in the last fiscal year."
 
Although, it seems that the rest of the industry is resisting Burberry's move:
 
"Other high-end brands, however, say destroying inventory is a necessary evil. Goods that end up in outlet stores or in the gray market, priced at a steep discount, contradict the industry's main sales pitch: that luxury goods command higher prices because they are inherently more valuable."
 
I'm sure the tax write-off is nice, too. While some in the industry will resist, however, Burberry (and Cartier) see value in changing the practice:
 
"Compagnie Financière Richemont , the Swiss luxury conglomerate that owns Cartier, spent hundreds of millions of euros in recent years buying back unsold watches, which were piling up at retailers because of a drop in demand from Chinese consumers. The company pried off the jewels and melted them down, but is reusing the materials. Burberry's announcement was aimed at younger shoppers who are environmentally conscious and, increasingly, a core demographic for the luxury-goods business. Brands across the industry are abandoning fur; imposing animal-welfare standards on their suppliers; and touting their policies for recycling and reducing waste. On Thursday, Burberry said it too was ditching the use of fur."
 
For others, however, the business argument is more complex:
 
"At Stefano Ricci, executives see the destruction of inventory as a service to the customer. Clients don't want to spend thousands of dollars on a suit, only to see the same item a few months later selling at an outlet store for half the price, they say."
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Burberry Disavows Burning
By Matthew Dalton
September 7, 2018
The Wall Street Journal
Late Edition – Final
B2
 

Friday, October 19, 2018

Strategic CSR - Recycling

The article in the first url below lays out in great detail the perilous state of the recycling industry, ever since China refused to keep taking our trash this year (see also Strategic CSR – Recycling here and here):
 
"Oregon is serious about recycling. Its residents are accustomed to dutifully separating milk cartons, yogurt containers, cereal boxes and kombucha bottles from their trash to divert them from the landfill. But this year, because of a far-reaching rule change in China, some of the recyclables are ending up in the local dump anyway. In recent months, in fact, thousands of tons of material left curbside for recycling in dozens of American cities and towns — including several in Oregon — have gone to landfills."
 
The associated problems of contaminated waste and "aspirational recycling" feed directly into this problem:
 
"China's stricter requirements also mean that loads of recycling are more likely to be considered contaminated if they contain materials that are not recyclable. That has compounded a problem that waste managers call wishful or aspirational recycling: people setting aside items for recycling because they believe or hope they are recyclable, even when they aren't."
 
The result is a collapse in the market for recyclables:
 
"Western states, which have relied the most on Chinese recycling plants, have been hit especially hard. In some areas — like Eugene, Ore., and parts of Idaho, Washington, Alaska and Hawaii — local officials and garbage haulers will no longer accept certain items for recycling, in some cases refusing most plastics, glass and certain types of paper. Instead, they say, customers should throw these items in the trash."
 
Many regulators, however, are wary of warning people off recycling, preferring instead to keep encouraging the practice so that, when (or if) recycling becomes profitable, they will not have to teach people how to recycle again:
 
"Other communities, like Grants Pass, Ore., home to about 37,000 people, are continuing to encourage their residents to recycle as usual, but the materials are winding up in landfills anyway. Local waste managers said they were concerned that if they told residents to stop recycling, it could be hard to get them to start again."
 
The problem becomes obvious once you realize how important China was as a destination for recycled waste:
 
"Americans recycle roughly 66 million tons of material each year, … about one-third of which is exported. The majority of those exports once went to China, said David Biderman, the executive director of the Solid Waste Association of North America, a research and advocacy group. But American scrap exports to China fell by about 35 percent in the first two months of this year, after the ban was implemented, said Joseph Pickard, chief economist for the Institute of Scrap Recycling Industries, a trade group. … In particular, exports of scrap plastic to China, valued at more than $300 million in 2015, totaled just $7.6 million in the first quarter of this year, down 90 percent from a year earlier, Mr. Pickard said. Other countries have stepped in to accept more plastics, but total scrap plastic exports are still down by 40 percent this year, he said."
 
Of course, the reason why the market for recycled material has cratered (or the costs of recycling make it prohibitive), is because the full costs of fossil fuels are not accounted for in the virgin products that we buy (plastics, in particular). If these costs were included, then we would have to pay the true costs of using virgin materials, which would make it worth our while to recycle those materials that have already been produced and consumed. Lifecycle pricing, although fiendishly complicated, would solve a lot of our sustainability problems and produce a much more efficient market. In order for that to occur, however, political leadership is required. As such, even though the article in the second url below suggests that some recyclers/waste managers are adapting, being forced to innovate in order to survive:
 
"American trash haulers and recyclers are becoming more prudent about how they collect and sort scrap after China stopped accepting most U.S. scrap exports earlier this year. … As a result, some recyclers have focused on producing cleaner loads of papers, plastic and corrugated cardboard, which can fetch higher prices. And cities and trash haulers are seeking alternative ways to manage such waste, while an abundance of hard-to-recycle plastics has revived some companies' use of that material to produce fuel."
 
The article in the third url below demonstrates that the problem is getting worse, not better:
 
"'There's no market. We're paying to get rid of it,' says Ben Harvey, president of EL Harvey & Sons, which handles recyclables from about 30 communities at its sorting facility in Westborough, Massachusetts. 'Seventy-five percent of what goes through our plant is worth nothing to negative numbers now.'"
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Your Recycling Get Recycled, Right? Maybe, or Maybe Not
By Livia Albeck-Ripka
May 31, 2018
The New York Times
Late Edition – Final
B1
 
Recyclers Clean Up Their Waste
By Bob Tita
June 7, 2018
The Wall Street Journal
Late Edition – Final
B4
 
Why America's recycling industry is in the dumps
October 10, 2018
CBS/Associated Press
 

Monday, October 15, 2018

Strategic CSR - The planet

The Sunday, August 5, 2018 edition of The New York Times Magazine was devoted solely to one issue – climate change. More specifically, the cover title of the issue was "Thirty years ago, we could have saved the planet." It tells the story of how virtually everything substantive that we know today about climate change was known by 1979 and, in the subsequent decade, the world came really close to negotiating a "binding, global framework to reduce carbon emissions." Unfortunately for the rest of us, 'really close' does not count and the Magazine explains why we, collectively, missed the opportunity to act. The result is our new reality, and it does not look good – here is the opening quote of the Prologue:
 
"The world has warmed more than one degree Celsius since the Industrial Revolution. The Paris climate agreement — the nonbinding, unenforceable and already unheeded treaty signed on Earth Day in 2016 — hoped to restrict warming to two degrees. The odds of succeeding, according to a recent study based on current emissions trends, are one in 20. If by some miracle we are able to limit warming to two degrees, we will only have to negotiate the extinction of the world's tropical reefs, sea-level rise of several meters and the abandonment of the Persian Gulf. The climate scientist James Hansen has called two-degree warming 'a prescription for long-term disaster.' Long-term disaster is now the best-case scenario. Three-degree warming is a prescription for short-term disaster: forests in the Arctic and the loss of most coastal cities. Robert Watson, a former director of the United Nations Intergovernmental Panel on Climate Change, has argued that three-degree warming is the realistic minimum. Four degrees: Europe in permanent drought; vast areas of China, India and Bangladesh claimed by desert; Polynesia swallowed by the sea; the Colorado River thinned to a trickle; the American Southwest largely uninhabitable. The prospect of a five-degree warming has prompted some of the world's leading climate scientists to warn of the end of human civilization. Is it a comfort or a curse, the knowledge that we could have avoided all this?"
 
Ominously:
 
"Keeping the planet to two degrees of warming, let alone 1.5 degrees, would require transformative action. It will take more than good works and voluntary commitments; it will take a revolution. But in order to become a revolutionary, you need first to suffer."
 
While I have seen online that the NYT issue received its fair share of critical reviews (e.g., here and here), these criticisms appear to come from environmentalists/activists who are angry the Magazine did not go far enough in blaming companies, in general, and the fossil fuel industry, in particular. What does not seem to be in dispute is that we had our chance, and we missed it. The recently issued report by the United Nations' IPCC about the perilous state of the planet's climate (the article in the second url below) only serves to remind those who are paying attention how close we now are to disaster:
 
"The report, issued … by the Intergovernmental Panel on Climate Change, a group of scientists convened by the United Nations to guide world leaders, describes a world of worsening food shortages and wildfires, and a mass die-off of coral reefs as soon as 2040 – a period well within the lifetime of much of the global population."
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Losing Earth: The Decade We Almost Stopped Climate Change
By Nathaniel Rich
August 5, 2018
The New York Times Magazine
 
Rebirth of the cool
By Coral Davenport
October 7, 2018
The New York Times
 

Thursday, October 11, 2018

Strategic CSR - Exxon

The article in the first url below explores the recent struggles of Exxon:
 
"Exxon faces a number of challenges, including investigations of its accounting and tax practices as well as lawsuits by cities and states seeking funds to pay for the effects of climate change. Its biggest problem is one the giant has seldom faced in its 148-year history: It isn't making as much money as it used to."
 
Up until 2008, Exxon was the largest publicly-traded firm in the world. Today, it is performing at a much lower level. Whether for political (sanctions), social (climate change legislation), or economic (lower profits) reasons, the firms is a shadow of its former self:
 
"In 2016, S&P Global Ratings stripped Exxon of the triple-A credit rating it held since 1930. It was one of only three companies to hold the distinction at that time, along with Microsoft Corp. and Johnson & Johnson . While Exxon once ranked as the world's largest company by market value, it was 10th as of June 30, less than half the size of Apple Inc."
 
Given the reality that a significant proportion of fossil fuel reserves will need to remain in the ground if we are to survive as a species, you have to think that Exxon (and CEO at the time, Rex Tillerson) is missing the bigger picture. While bad luck has played its part, strategic vision has also been lacking:
 
"As [oil] prices rose to all-time highs of almost $150 a barrel, Mr. Tillerson led the charge to chase more expensive prospects that could meet the world's thirst for crude. He looked to Canada's oil sands, natural gas fracking and even Russia's Arctic, all of which required higher prices to be profitable. Those efforts largely failed. Exxon's production has declined in the past five years, and the company has delivered lackluster financial results. Today, oil prices are around $74 a barrel. … its U.S. drilling business has lost money in 11 of the last 15 quarters."
 
While other energy companies are increasing their investment in low-carbon or alternative energies (Shell, for example, is investing heavily in natural gas), Exxon is doubling down on oil. As the price per barrel fluctuates, the extent to which the firm is exposed has become apparent. Moreover, the working assumption internally is that Exxon will be able to extract all of its known reserves, in direct contradiction to what climate science is telling us. The result is a sense that the firm has seriously misjudged the market:
 
"Shareholders haven't responded with enthusiasm. The price of crude is up about 60% in the past year, but Exxon shares are up less than 5%. … Meanwhile, rivals such as Shell, BP and Total have diversified outside of fossil fuels."
 
The article in the second url below suggests that at least Exxon understands it is losing the battle of perceptions:
 
"Exxon Mobil will donate $1 million to a campaign promoting a tax to curb emissions of planet-warming carbon dioxide to U.S. lawmakers and the American public. … The plan advocates for placing a fee on carbon emitted by companies, which would start at $40 per ton and rise gradually. Revenues from the tax would be returned to Americans in the form of regular, automatic dividend payments."
 
Although, $1 million might only be a rounding error for a firm the size of Exxon, and there is plenty of evidence to suggest the firm sees this move as a quid pro quo and has not significantly shifted its position:
 
"The final pillar of the plan calls for rolling back the Environmental Protection Agency's authority to regulate carbon emissions and repealing rules like President Barack Obama's Clean Power Plan, which the Trump administration is already in the process of dismantling."
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Exxon Is Running Low
By Bradley Olson
July 14-15, 2018
The Wall Street Journal
Late Edition – Final
B1
 
Exxon Mobil pledges $1 million to campaign to promote carbon tax
By Tom DiChristopher
October 9, 2018
CNBC
 

Monday, October 8, 2018

Strategic CSR - Economic wellbeing

The article in the url below presents an interesting take on how key economic indicators are created. In general, the author argues that new indicators arise following a major economic crisis, when the government realizes the current indicators did not allow it to predict the that the economy was in trouble and a crisis was imminent:
 
"The unemployment rate was invented in the 1870s in response to concerns about mass joblessness after the Panic of 1873. The government's measure of national output, now called G.D.P., began during the Great Depression."
 
As such, the author suggests that, ten years on from the most recent financial crisis, the level of frustration at the economy by the general public (a frustration that "has helped create a threat to Western liberal democracy that would have been hard to imagine a decade ago"), warrants the development of different indicators to the ones we currently have:
 
"Look around, and you can see the lingering effects of the financial crisis just about everywhere — everywhere, that is, except in the most commonly cited economic statistics. So who are you going to believe: those statistics, or your own eyes?"
 
The problem is not that the current indicators are flawed, but that they measure the wrong things in ways that cause us to have a distorted view of the current economic situation. This leads us to conclude that, on the surface, the economy looks strong when, in reality, we are just not looking in the right places:
 
"The main reason is inequality. A small, affluent segment of the population receives a large and growing share of the economy's bounty. It was true before Lehman Brothers collapsed on Sept. 15, 2008, and it has become even more so since. As a result, statistics that sound as if they describe the broad American economy — like G.D.P. and the Dow Jones industrial average — end up mostly describing the experiences of the affluent."
 
The best example of this is the health of the stock market. While it is undeniably stronger today than ten years ago, it is not clear that most people benefit from this health:
 
"The stock market, for example, has completely recovered from the financial crisis, and then some. Stocks are now worth almost 60 percent more than when the crisis began in 2007, according to an inflation-adjusted measure from Moody's Analytics. But wealthy households own the bulk of stocks. Most Americans are much more dependent on their houses. That's why the net worth of the median household is still about 20 percent lower than it was in early 2007. When television commentators drone on about the Dow, they're not talking about a good measure of most people's wealth."
 
The unemployment rate is another example of an indicator that used to measure the health of the economy, but does not do so nearly as effectively today:
 
"In recent decades, the number of idle working-age adults has surged. They are not working, not looking for work, not going to school and not taking care of children. Many of them would like to work, but they can't find a decent-paying job and have given up looking. They are not counted in the official unemployment rate."
 
The chart in the article highlighting the gap between the official unemployment rate and the percentage of men who have dropped out of the workforce demonstrates this issue particularly effectively, but also how it has become more of an issue over time:
 
 
In response, the author highlights an initiative to develop an alternative measure of GDP that focuses more on general wellbeing:
 
"And there is no reason that data reform needs to be limited to G.D.P. The Labor Department could change the monthly jobs report to give more attention to other unemployment numbers. It could also provide more data on wages, rather than only broad averages. The Federal Reserve, for its part, could publish quarterly estimates of household wealth by economic class. …  [Other potential] numbers include: the overall share of working-age adults who are actually working; pay at different points on the income distribution; and the same sort of distribution for net worth (which includes stock holdings, home values and other assets and debts)."
 
The point is not that we do not have alternatives, but that the political will is not there to develop and establish them as broadly accepted measures. This is no doubt partly due to the resources necessary to do so; it may also be because the story they would tell is much less politically palatable
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
We're Measuring the Economy All Wrong
By David Leonhardt
September 16, 2018
The New York Times
Late Edition – Final
SR1