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

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Tuesday, May 14, 2019

Strategic CSR - Facebook

This is the last CSR Newsletter of the Spring semester.
Have a great summer and I will see you in August!
The 5e of Strategic CSR contains a new case-study on the media, in general, and Facebook and related issues, in particular. The article in the url below builds on an earlier Newsletter (Strategic CSR – Facebook) to add an interesting twist:
"Facebook may eventually have more dead users than living ones. If Facebook continues to grow at its current rate, the site could have 4.9 billion deceased members by 2100, according to [new research]. Even if growth had stopped entirely last year, the study finds, Facebook would be looking at about 1.4 billion dead members by 2100. By 2070, in that scenario, the dead would already outnumber the living."
This, of course, raises the interesting question of who owns the data of these people's profiles and pages, filled with their histories, captured in words and photos. The scale of Facebook's success raises the stakes in terms of what to do with these data:
"'Never before in history has such a vast archive of human behavior and culture been assembled in one place.' … 'Controlling this archive will, in a sense, be to control our history.'"
Facebook is aware of this problem and is responding, somewhat:
"As it stands, Facebook users who are alive can choose a 'legacy contact' who gets access to much of the account's data after the original user dies – at which point the account can be 'memorialized.' Others, however, cannot log into it, posing a potential problem if a person dies before designating a legacy contact."
In other words, the issue of real death and virtual life remains a legal and ethical challenge:
"Is it time to appoint social media executors? Should we collect our passwords and include them in our wills? Should our Instagram accounts become part of the historical record?"
Have a great summer.
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Facebook could have 4.9bn dead users by 2100, study finds
By Matthew Cantor
April 24, 2019
The Guardian

Friday, May 10, 2019

Strategic CSR - Dick's + Guns

The article in the url below puts a price on principle. In particular, it reports the estimated cost to Dick's Sporting Goods of its decision last year to stop selling guns in the aftermath of yet another school mass shooting here in the U.S. (this time, in Parkland, FL):
"Last February, when Dick's Sporting Goods boss Ed Stack announced he was restricting gun sales at the country's largest sports retailer, he knew it'd be costly. At the time, Dick's was a major seller of firearms. Guns also drove the sale of soft goods—boots, hats, jackets. What's more, Stack, the retailer's chief executive officer, suspected the position could drive off some of his customers on political principle. He was right. Dick's estimates the policy change cost the company about $150 million in lost sales, an amount equivalent to 1.7 percent of annual revenue. Stack says it was worth it."
It is worth noting that this figure is not a total cost, but one for last year only. In other words, if the company continues not to sell guns, there will be a cumulative effect. Nevertheless, rather than regret his decision, Stack has doubled-down:
"'The system does not work,' Stack said. 'It's important that when you know there's something that's not working, and it's to the detriment of the public, you have to stand up.'"
It turned out that there was a direct connection between Dick's and this particular shooting:
"The 2018 school massacre at Parkland, Florida, touched a nerve for the company. Nikolas Cruz, the shooter, had legally purchased a shotgun from Dick's a few months before the attack. A day after Cruz was arrested, police in Vermont apprehended a teenager with plans to shoot up his high school. He, too, had legally purchased a shotgun from Dick's."
This is a significant cost that Dick's is enduring. In order to justify it, it would be helpful if the firm's stakeholders demonstrated their support (if they truly support the policy). Here, there is some good news and some bad news. In terms of shareholders, there still appears to be broad support for the company;
"The stock price hasn't suffered. Dick's shares, which didn't move much following the announcement last February, have climbed 14 percent in the 13 months since, outpacing the 4 percent rise in the benchmark Russell 3000 Index."
Consumers, it seems, are less committed:
"Some people applauded the CEO's decision and promised to show their appreciation with their business—a phenomenon called 'buycotting'—but those people didn't stick around."
Unfortunately, recent research shows that Dick's (or any other company that stands on principle) may see similar reactions, at least among consumers:
"What happened at Dick's confirms new study results out of Stanford University. Respondents said they were more likely to buy a product to support a CEO's political stance than they were to boycott in disagreement, but their actions revealed the opposite. When asked for specific examples, 69 percent could name a product they'd stopped buying, and only 21 percent could recall a product they started buying."
Or, as Stack puts it:
"Love is fleeting. Hate is forever."
Take care
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Restricting Gun Sales Cost Dick's $150 Million Last Year
By Eben Novy-Williams
March 29, 2019
Bloomberg Businessweek

Tuesday, May 7, 2019

Strategic CSR - Aluminum

In contrast to most of the recycling industry, which is suffering due to the decision by China to stop accepting imports of scrap materials (for example, see Strategic CSR – Recycling and Strategic CSR - Recycling), the article in the url below reports that the trade in recycled aluminum is booming:

"Companies in the U.S. that turn junked cars and beer cans into fresh aluminum are seeing business boom thanks to the trade fight between Washington and Beijing."
While the domestic industry is doing well primarily because the tariffs are driving up the price of imports, it is particularly encouraging to see that the use of recycled aluminum is flourishing:
"Aluminum made from recycled scrap made up the majority of the aluminum used in the U.S. for the first time last year, according to market forecaster Harbor Aluminum Intelligence Unit LLC, which tracks U.S. government reports on aluminum production and scrap usage back to the 1920s."
It appears that this is mostly due to the lack of capacity for virgin aluminum, which is forcing the recycled industry to step up in order to meet growing demand:
"… domestic smelters that make new aluminum from bauxite aren't able to supply more than a fraction of the aluminum consumed, even with higher production last year. Instead, much of the increase in domestic production to offset lower imports has come from the processors that make aluminum from scrap."
What the article doesn't get into, but is more important for long-term trends, is the relative costs of new versus recycled aluminum. Right now, it seems the industry will take whatever aluminum it can get from whatever sources. If the tariffs are removed, however, what does the future hold? Will the industry revert to favoring sources of new aluminum or can the recycling process be made more cost effective to drive further innovation and encourage more recycling?
Take care
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Aluminum Rules the Scrapheap
By Bob Tita
January 17, 2019
The Wall Street Journal
Late Edition – Final

Thursday, May 2, 2019

Strategic CSR - Amazon

The article in the first url below discusses Amazon's announcement last year that it would raise the minimum wage of its employees in the US and UK. In particular, the author argues that, while economics and a tightening labor market no doubt played a role, the primary motivation for the decision was political. That is, in the aftermath of Bernie Sander's Stop BEZOS proposed legislation (and the accompanying publicity around the extent to which Amazon employees rely on state welfare to subsist), the company felt it was advisable to appease the politicians:
"For months, Sanders has been criticizing the company for paying its workers too little. He went so far as to offer a bill called the 'Stop BEZOS Act,' for Jeff Bezos, Amazon's C.E.O. The bill was deeply flawed, but it still served to call more attention to the issue."
As the author notes, "this is how democracy and capitalism are supposed to work." More specifically, it is a great example of stakeholder pressure (government and the media) being brought to bear in a way that forced a change in corporate behavior. While the details of the policies in Sander's bill were problematic (in the sense that they essentially constituted a tax on employment, which might easily have led to a reduction in jobs for the people Sanders was most seeking to help), the problem he raised was real and something that, ultimately, Amazon felt uncomfortable with once it was exposed:
"All of this attention wasn't pleasant for Amazon. It cares about its image. … [Subsequently], Amazon announced that it was raising its minimum hourly pay to $15. About 350,000 workers will receive an immediate raise as a result. Amazon also called on other companies to do the same and said it would lobby Washington to increase the federal minimum wage."
This reflects the extent to which Amazon's higher profile exposes it to greater stakeholder pressure. The article in the second url below, for example, shows how employees (emboldened by action taken in the IT sector in recent months – e.g., Strategic CSR – Google), are beginning to become more aggressive in their demands of their employer:
"This week, more than 4,200 Amazon employees called on the company to rethink how it addresses and contributes to a warming planet. The action is the largest employee-driven movement on climate change to take place in the influential tech industry."
Interestingly, the employees are using a tool IT companies use to tie employees more closely to the firm – stock options:
"Like other shareholders, they can file a resolution urging a particular corporate change that investors vote on at a company's annual meeting. Historically, this approach has been used by outside activist investors, not employees."
As one Amazon employee put it:
"'It's exactly what Amazon has taught me to be: bold, audacious, and tackle big problems,' said Maren Costa, a principal user-experience designer who has been with the company for almost 15 years."
Take care
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Amazon's Surrender is Inspiring
By David Leonhardt
October 3, 2018
The New York Times
Also here:
By Karen Weise
April 11, 2019
The New York Times
Late Edition – Final