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


Thursday, February 21, 2019

Strategic CSR - Palladium (II)

The article in the url below contains a follow-up to the Palladium Newsletter of a couple of weeks ago (Strategic CSR – Palladium), which reported that the metal, palladium, is now worth more than gold. As a result, the criminal world is adapting:
 
"Soaring palladium prices are inspiring an unusual band of criminals: catalytic converter thieves."
 
The article reports that an epidemic is striking parked cars across Chicago. And when thieves strike, they are only interested in the catalytic converters, nothing else on the cars:
 
"Police in Chicago say perpetrators, who harvest the devices and sell the scrap metal, have converter theft down to a fine art. 'What tends to happen is that in the middle of the night, a group of guys come by with a truck and a reciprocating saw. They cut out the converter, throw it in the truck and drive away,' said Howard Ludwig, public information officer at the Chicago Police Department."
 
Sigh. Such is human nature.
 
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/
 
 
Thieves Target Palladium in Cars
By David Hodari
February 11, 2019
The Wall Street Journal
Late Edition – Final
B1
 

Tuesday, February 19, 2019

Strategic CSR - Green New Deal

The recently announced Green New Deal (GND), fronted most publicly by Alexandria Ocasio-Cortez (the new congresswoman from New York), is receiving a lot of attention in the media. As The Economist puts it in the article in the first url below, the proposal is both popular and controversial, having "been met with surprising enthusiasm in Washington." In more substantive (i.e., non-political) circles, however, the GND has been received less enthusiastically. The theme that seems to unite the skeptical commentaries I have read is the accusation that the proponents of the GND misunderstand the fundamental nature of the problem and, as such, have responded with an ineffective solution. In short, if the goal is to tackle climate change, then the GND is unlikely to be successful. Rather than seeing climate change as a "straightforward … market failure" that can be fixed through pricing (i.e., including the externalized costs of carbon into the price we pay to consume it), the GND instead sees climate change as a social problem that must be fixed through government intervention. Given the nature of the proposed intervention (in particular, the scale), skeptics expect numerous unintended consequences:
 
"… the Green New Deal largely dispenses with analysis of the costs and benefits of climate policy. It would create large opportunities for rent-seeking and protectionism, with no guarantee that the promised climate benefits will follow. It might chuck growth-throttling tax rises and dangerously high deficits into the bargain as well."
 
You can read about the GND here. Suffice it to say, it proposes a substantial increase in government involvement in the economy, at the expense of market forces. David Brooks tackles the topic in the article in the second url below, highlighting the massive reorganization of government responsibility:
 
"[The GND] would definitely represent the greatest centralization of power in the hands of the Washington elite in our history. … Under the Green New Deal, the government would provide a job to any person who wanted one. The government would oversee the renovation of every building in America. The government would put sector after sector under partial or complete federal control: the energy sector, the transportation system, the farm economy, capital markets, the health care system."
 
Unfortunately, as he notes, the proposal is both lacking in detail ("Exactly which agency would inspect and oversee the renovation of every building in America? Exactly which agency would hire every worker?") and is highly implausible. After all, "This is from people who couldn't even organize the successful release of their own background document":
 
"The authors of this fantasy are right that we need to do something about global warming and inequality. But simple attempts to realign incentives, like the carbon tax, would be more effective and more realistic than government efforts to reorganize vast industries."
 
Ultimately, Brooks concludes that the consequence of greatly expanding the role of government in society is that it just replaces one elite (capitalists) with another elite (politicians). And it is not clear that a political elite would generate better outcomes than a capitalist elite:
 
"But the underlying faith of the Green New Deal is a faith in the guiding wisdom of the political elite. The authors of the Green New Deal assume that technocratic planners can master the movements of 328 million Americans. … They assume that congressional leaders have the ability to direct what in effect would be gigantic energy firms and gigantic investment houses without giving sweetheart deals to vested interests, without getting corrupted by this newfound power, without letting the whole thing get swallowed up by incompetence. (This is a Congress that can't pass a budget.)"
 
Unfortunately, if we are looking for the efficient (and, for that matter, fair and ethical) allocation of resources, the empirics side with the market. Recent corruptions have produced the distorted outcomes that many are justifiably angry about. But, the solution is to eradicate the corruptions; not to get rid of the whole system and replace it with something that has been proven to be less effective. Any proposed solutions have to grapple with this complexity, rather than resort to unrealistic ideals. This brings me to the article in the third url below, which reviews a recently published book on climate change and brings a little more realism to the debate. In short, it relates how complicated it is for a society to shift from one dominant energy source to another:
 
"Some years ago, while studying how societies transitioned from one energy source to another over the past 200 years, the Italian physicist Cesare Marchetti and his colleagues discovered a hard truth: It takes almost a century for a new source of primary energy — coal, petroleum, natural gas, nuclear power — to command half the world market. Just to grow to 10 percent from 1 percent takes almost 50 years."
 
Rather than technology, the main barrier to progress is usually related logistics and infrastructure:
 
"You would expect suppliers to switch quickly to a better (more abundant, cheaper, cleaner) source. But infrastructure has to catch up: In America, natural gas needed long-distance pipelines to go national; electric cars need still-scarce charging stations. People have to adapt: Elizabethan preachers condemned coal as literally the Devil's excrement; some Victorian homeowners comfortable with gaslight thought Edison's light bulbs too bright. Competition from heavily invested older sources has to be overcome, as with fossil fuels today. These and other changes take time."
 
As the article continues, we do not have that much time to switch to a non-carbon-based energy. While the GND is important in terms of raising awareness, therefore, it does little to demonstrate an appreciation of the scale of the problem we face. It also fails to grapple with the realities of any necessary changes, such as which energy sources can possibly provide the supply we need in the available time-frame. To the authors of the book being reviewed, there is only one answer (logically and technically)—one that many environmentalists will find unacceptable:
 
"… worldwide energy consumption 30 years from now is projected to be about 50 percent higher than it is today. If that number sounds exaggerated, think of four billion Asians installing air-conditioning. For [the authors], the only possible solution to this double dilemma is a rapid, worldwide expansion of nuclear power. No other source or collection of sources of energy, they argue, is positioned to meet these challenges in time."
 
I am not sure how that would be possible (since nuclear power stations take time to build, largely because they are subject to political oversight) but, from everything I have read, there is no escaping the fact that nuclear has to be a big part of the solution. However, you won't find this sort of nuance in the GND.
 
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/


Brave new deal
February 9, 2019
The Economist
How the Left Embraced Elitism
By David Brooks
February 12, 2019
The New York Times

Nuclear Option
By Richard Rhodes
February 10, 2019
The New York Times Book Review
 

Thursday, February 14, 2019

Strategic CSR - The amoral market

How do you best incentivize people in order to optimize societal outcomes? I often struggle with this; the argument presented by David Brooks in the article in the url below warns against a pure economic answer to the problem:
 
"We turned off the moral lens. You probably know the example of the Israeli day care centers. Parents kept showing up late to pick up their kids. To address the problem, the centers experimented with fining the late parents. But the number of late pickups doubled. Before, coming to pick up your kid on time was a moral obligation — to be fair to the day care workers. After, it was seen as an economic transaction. Parents were happy to pay to be late. We more or less did this as an entire society — we switched to a purely economic lens."
 
In essence, Brooks suggests that we somehow chose to emphasize the economic and remove the moral—as he puts it:
 
"… economic priorities took the top spot and obliterated everything else. … We ripped the market out of its moral and social context and let it operate purely by its own rules. We made the market its own priest and confessor."
 
I think this is the wrong conclusion. There are two problems, in particular, with Brooks' logic: First, I do not think it is possible to separate the moral from the economic. When we buy something (whether it is a product, or service, or stock, or whatever), we are expressing our values. Disposable income, for most of us, is a scarce resource. As such, we reveal our priorities when we use it. Second, the accusation that we removed the moral assumes that our morals remained the same and that we just took them out of the equation. Apart from being an overly-agentic description of human decision-making (a completely separate issue), my take is that the morals and values are there, just as they have always been (it is impossible to remove them from any decision we make), it is more likely to me that they changed. Why they changed is difficult to answer – whenever I think through issues at the societal level, the explanation often seems to come back to education. What does a High School education mean today? For that matter, what does an undergraduate degree mean, or a master's degree? If those things mean the same that they used to, then it is possible that not much has changed (unlikely, but possible). But, if they mean something different, then something has definitely changed. The outcomes that Brooks is highlighting, to me, suggest they have changed in a way that has made our society more individualistic and less collective (among many other changes). This shift makes it more acceptable to replace moral responsibilities with economic payment—as in the above quote and subsequent examples Brooks includes:
 
"Anything you could legally do to make money was deemed O.K. A billion-dollar salary for a hedge fund manager? Perfectly acceptable. The Apple corporation exists because of American institutions. But, as Pearlstein notes, Apple parked its intellectual property in an Irish subsidiary so it could avoid paying taxes in America and support those institutions. It saved $9 billion in 2012 alone. This is clearly sleazy behavior. Apple employees should be humiliated and ashamed."
 
It is not that the morals have been removed, therefore, but that we have changed our morals to allow certain kinds of behavior that would have been frowned upon in earlier times:
 
"Human beings are moral animals, and suddenly American moral animals found themselves in an amoral economic system, which felt increasingly alienating and gross."
 
No, it is not that our economic system is "amoral," but that the morals today are different than they used to be. This distinction matters, I think, because suggesting morals have been removed gives us all a pass on some level. Reiterating that morals and values are still very much there, but have changed, keeps the burden on us to do something about it, … if we want to.
 
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/


Remoralizing the market
By David Brooks
January 11, 2019
The New York Times
Late Edition – Final
A23
 

Tuesday, February 12, 2019

Strategic CSR - Chickens

As noted in the article in the first url below, and in previous Newsletters (see Strategic CSR – Anthropocene, Strategic CSR – Extinction, and Strategic CSR - Plastic), scientists have determined that we are now in a new geological epoch – the Anthropocene:
 
"The 11,700 or so years following the last major ice age are collectively called the Holocene, a geological chapter in earth's biography that includes the development of all human civilization. Some experts argue that humans have fundamentally altered the earth's biosphere to the point where we now live in a new age called the Anthropocene, an amalgamation of the Greek words for 'new' and 'human'. Copernicus was wrong: the earth doesn't revolve around the sun anymore. It revolves around us."
 
Previously, it was reported that the start of this period was pegged to the 1950s, and the main indicators were the layers of atomic dust (from the open-air nuclear weapons tests that took place at the time) and plastic (from the development and widespread use of that wonderfully adaptable, but environmentally problematic, material). The article also mentions the spread of concrete as an indicator of human domination of the planet. Now, however, another indicator that began around the same time has been identified – the factory-farmed chicken:
 
"In 2016, the world consumed almost 66 billion chickens. To put that number in perspective, we slaughtered 1.5 billion pigs, 550 million sheep, 460 million goats, and 300 million cattle that same year. About nine out of every 10 terrestrial animals slaughtered for food globally are chickens. And that looks like it may only increase as chicken consumption is growing – especially in developing countries – faster than the consumption of any other land animal."
 
In particular, it is the bones that are left behind after we eat these chickens that will leave a marker for future beings to know we were here. And we eat so many of them:
 
"In the wild, bird carcasses either decay or are scavenged by predators. Chicken bones, on the other hand, are discarded in landfills where anaerobic activity tends to mummify more than decay. We may see our appetite for 66 billion chickens a year crystalized in the fossil record long into the future."
 
To repeat, that is 66 billion chickens a year! The domesticated chicken just might be one of the most successful animal ever in terms of its overwhelming dominance:
 
"Our planet is covered with chickens. If you took a snapshot of all the birds alive on the planet at this very moment, domesticated poultry – mostly chickens – would have a total biomass about three times greater than all wild bird species combined."
 
This bird is definitely not natural, but is very much the product of modern science:
 
"The modern chicken has been bred into an entirely new animal that looks very little like its wild counterpart. Through breeding techniques and feed manipulation, farmed chickens quadrupled in size between the mid-1950s to the mid-2000s. In order to keep them from getting deathly ill and to accelerate growth, chickens are fed antibiotics prophylactically to the tune of half a million pounds a year in America. About 80% of all antibiotics sold in the US and over half sold around the world are fed to farmed animals, accelerating antibiotic-resistance in bacteria – a public health crisis already killing at least 700,000 people across the globe annually."
 
For an indication of the extent to which chickens are, today, manufactured (rather than natural), see this graphic taken from the article in the second url below, showing the size of a 56 day old chicken in 1957, 1978, and 2005:
 
 
For additional commentary on the domestic chicken, see the great segment John Oliver did on this wonder of modern science: https://youtu.be/X9wHzt6gBgI
 
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/
 
 
Why your chicken wings means we've entered a new epoch
By Max Elder
January 10, 2019
The Guardian
 
Ruling the roost
January 19, 2019
The Economist
Late Edition – Final
59-60
 

Thursday, February 7, 2019

Strategic CSR - Palladium

The article in the url below reports that gold is no longer the world's most precious metal:
 
"Last week, an obscure and far less sexy rival called palladium swung ahead, for the first time in 16 years. Gold briefly retook the lead, but spot palladium prices have beaten out gold prices for the past three days. Palladium hit a record high on Wednesday before settling in at $1,255.12 an ounce at the market close in London on Thursday. … Gold was $1,243.02 an ounce."
 
Both gold and palladium are relevant to the CSR debate. Gold is used in electronic consumer devices, due to its properties as an efficient conductor of electricity (it is also malleable and does not tarnish). But, gold is dirty to mine and becomes part of the massive amounts of e-waste that our societies currently generate. Palladium is similarly useful for consumer electronics, but is mostly used in catalytic convertors to scrub the exhaust fumes generated in fuel-based combustion engines:
 
"Until recently, palladium was perhaps best known for sharing a name with several popular entertainment venues and for powering the fictional arc reactor mechanism hooked up to Iron Man's heart. Its primary purpose is far less glamorous: More than 80 percent of the world's palladium is used in the catalytic converters that help vehicles manage their pollutant output."
 
Of course, these uses are what propel the prices of these different metals; it is also what will determine their 'efficient' allocation. What is interesting, though, is the sudden nature of the rise in interest in palladium:
 
"Palladium is one of the best-performing commodities of 2018. Its price has surged more than 50 percent in the past four months."
 
The article contains a brief history of the metal and hints (but is not particularly clear) as to why the price has surged suddenly – it seems to be a mix of greater demand (higher sales of gasoline cars, which use catalytic converters, and lower sales of diesel cars, which don't) and tighter supply (from dodgy places like Russia), even in the face of greater efforts to recycle. As a result:
 
"Demand for palladium has steadily increased for eight years and is expected to outstrip supply by 1.2 million ounces in 2018, and Metals Focus has forecast 'further, sizable deficits to come.' As supply tightens, palladium's price has climbed. … Experts expect it to stay elevated for at least a few months."
 
Either way, I'm guessing the market for palladium jewelry will take a little more time to develop.
 
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/
 
 
Pricier Than Gold, and in Your Engine
By Tiffany Hsu
December 14, 2018
The New York Times
Late Edition – Final
B4
 

Monday, February 4, 2019

Strategic CSR - Google

The article in the first url below shows how employees with leverage are asking increasingly more of their employers. The article focuses on the recent activism of Google's employees:
 
"It was a busy fall for Google workers speaking out against their employer. On Nov. 27, a group of full-time employees and contractors were campaigning to extend new policy changes for handling sexual harassment allegations to temporary and contract workers. … The same day, workers made public a petition protesting exploratory plans to build a search engine that complies with China's online censorship regime. Earlier in the month, 20,000 Google workers walked off the job worldwide in a widely watched protest over how the company handles sexual misconduct claims, following a bombshell New York Times story about Google's management of past allegations. "
 
The article presents such efforts as the new face of employee activism:
 
"The walkout was repeatedly called a 'watershed moment,' one that was said to represent a significant development in the labor-employer relationship and a new pressure point for tech giants facing a world increasingly distrusting of their businesses."
 
In particular:
 
"What's different about the efforts of these employees … is that they're not merely pushing for traditional labor issues, such as higher wages or better benefits. Instead, some are publicly questioning their employers' business decisions, opposing government contracts or bringing up broader moral questions about workplace policies, such as the inclusion of contract workers in an increasingly gig economy and the ethical implications of paying executives millions of dollars following allegations of sexual misconduct."
 
Although there is no reason why employees should not have the same leverage in any organization, it appears that employees in Silicon Valley feel more secure in their jobs (or more passionate about their beliefs) to risk alienating their employers. And, at companies like Salesforce.com, the demands are leading to structural changes:
 
"[Recently] Salesforce announced a 'chief ethical and humane use officer' whose job will be 'to develop a strategic framework for the ethical and humane use of technology across Salesforce,' according to a news release. Back in June, more than 650 Salesforce employees signed a petition over the software company's contracts with the U.S. Customers and Border Protection Agency, according to a Bloomberg report; Salesforce CEO Marc Benioff has also been critical of Facebook's addictive qualities, comparing the social media giant to cigarettes."
 
What I found particularly interesting, however, is that employees seem to be differentiating between societal problems that are related to the firm's expertize and those that are completely unrelated:
 
"A recent survey of 1,000 workers by MetLife, for instance, found that 52 percent expect employers to help solve societal issues even if they are not central to the company's business, up from 41 percent a year ago. Seventy percent said companies should work to address society's challenges, up from 63 percent last year."
 
There are two aspects of this phenomenon from a strategic CSR perspective. On the one hand, this is not very sensible from an allocation of resources perspective. It does not make much sense to ask a firm to solve a problem in which it has little or no expertize. Salesforce.com, for example, knows how to write software; it knows little about solving homelessness, yet its CEO, Marc Benioff, has taken a high profile stand on this issue, both in lobbying San Francisco to pass legislation and publicly arguing with other CEOs, such as Jack Dorsey of Twitter, who take a different position (e.g., see here).
 
On the other hand, however, if a key stakeholder group truly values action by a firm, then it is in the firm's interests to respond to these needs. The only question then is, do these stakeholders truly care about the cause (rather than merely saying they care)? For example, if the firm reduced wages in order to address the particular problem, would employees still support it? Or, perhaps more likely, if the firm took away some perks in order to do so, would that be OK? In order for any action to make sense for a firm, it has to be supported meaningfully by a subset of stakeholders. If no one is willing to support it, then clearly it is a waste of the firm's resources to address it. At Google, there is a limit to the activism, at least from the perspective of CEO, Sundar Pichai:
 
"On the same day as the walkout, Pichai spoke at a New York Times conference and said 'there's anger and frustration within the company. We all feel it. I feel it, too. At Google, we set a very, very high bar, and we clearly didn't live up to our expectations.' Yet while Google may be a company that has 'given employees a lot of voice,' he said, 'we don't run the company by referendum.'"
 
The article in the second url below reports what it says is "the first time that tech employees have led their own shareholder proposal":
 
"At Amazon, more than a dozen employees who had received stock grants recently exercised their rights as shareholders. In late November and early December, they filed identical shareholder petitions asking the e-commerce giant to release a comprehensive plan addressing climate change."
 
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/
 
 
How tech workers are fueling a new employee activism movement
By Jena McGregor
December 13, 2018
The Washington Post
 
Workers Got Stock. Then They Took Action
By Kate Conger
December 17, 2018
The New York Times
Late Edition – Final
B1